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Transcript of lhek “kYd ,o dUnzh; mRikn “kYd vk;Drky;] dUnzh; mRikn Hkou ... filePage 1 of 76 lhek “kYd ,o...
Page 1 of 76
lhek “kqYd ,oa dsUnzh; mRikn “kqYd vk;qDrky;] dsUnzh; mRikn Hkou] jsl dkslZ] fjax jksM jktdksV-360001 CENTRAL EXCISE & CUSTOMS COMMISSIONERATE
CENTRAL EXCISE BHAVAN : RACE COURSE RING ROAD RAJKOT 360 001
Phone – (0281) 2442030, 2441980, 2441982 Fax – (0281) 2443313, 2452967 Email: [email protected] Qk- la- F.No. V.25/15-316/Adj/2009
By RPAD/HAND DELIVERY
vkns”k dh rkjh[k Date of order
25.03.2013 ewy vkns”k la- ORDER IN ORIGINAL NO. 43 & 44/COMMR/2013
tkjh djus dh rkjh[k Date of Issue
14.05.2013
vkns”kdrkZ Ordered by
वी प नाभन vk;qDr
ds-m-“kq- vk;qDrky; jktdksV V. Padmanabhan Commissioner,
Customs & Central Excise, Rajkot.
ds lanHkZ esa In the case of
M/s. New Kishan Cement Private Limited & others.
dkj.k crkvks la- ,oa frfFk Show Cause Notice No. & Date
1. AE/D.II/AR-Shapar/Commr/ 55/2011 dated: 29.03.2011
2. IV/3-31/D/2009 dated:
21.10.2008
1. जस य (य ) को यह ित भेजी जाती है, उसे य गत योग के िलए िनःशु क दान क जाती है। This copy is granted free of charge for private use of the person(s) to whom it is sent.
2. इस आदेश से असंतु कोई भी य इस आदेश क ाि से तीन माह के भीतर सीमा शु क, उ पाद शु क एवं सेवाकर अपीलीय यायािधकरण, अहमदाबाद पीठ को इस आदेश के व अपील कर सकता है। अपील सहायक र ज ार, सीमा शु क, उ पाद शु क एवं सेवाकर अपीलीय यायािधकरण,O-20, मेघाणीनगर, यु मे टल हॉ पीटल क पाउ ड, अहमदाबाद-380 016 को स बोिधत होनी चा हए। Any person deeming himself aggrieved by this Order may appeal against this Order to the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad Bench within three months from the date of its communication. The appeal must be addressed to the Assistant Registrar, Customs, Excise and Service Tax Appellate Tribunal, O-20, Meghani Nagar, Mental Hospital Compound, Ahmedabad-380 016.
3. उ अपील ा प सं. इ.ए.3 म दा खल क जानी चा हए। उसपर के य उ पद शु क (अपील) िनयमावली, 2001 के िनयम 3 के उप िनयम (2) म विन द य य ारा ह ता र कए जाएंगे। उ अपील को चार ितय म दा खल कया जाए तथा जस
आदेश के व अपील क गई हो, उसक भी उतनी ह ितयाँ संल न क जाएँ (उनम से कम से कम एक ित मा णत होनी चा हए)। अपील से स बंिधत सभी द तावेज भी चार ितय म अ े षत कए जाने चा हए।
Page 2 of 76
The Appeal should be filed in form No. E.A.3. It shall be signed by the persons specified in sub-rule (2) of Rule 3 of the Central Excise (Appeals) Rules, 2001. It shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be certified copy). All supporting documents of the appeal should be forwarded in quadruplicate.
4. अपील जसम त य का ववरण एवं अपील के आधार शािमल ह, चार ितय म दा खल क जाएगी तथा उसके साथ जस आदेश के व अपील क गई हो, उसक भी उतनी ह ितयाँ संलगन क जाएंगी (उनम से कम से कम एक मा णत ित होगी)। The Appeal including the statement of facts and the grounds of appeal shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be a certified copy.)
5. अपील का प अं ेजी अथवा ह द म होगा एवं इसे सं एवं कसी तक अथवा ववरण के बना अपील के कारण के प शीष के अंतगत तैयार करना चा हए एवं ऐसे कारण को मानुसार मां कत करना चा हए। The form of appeal shall be in English or Hindi and should be set forth concisely and under distinct heads of the grounds of appeals without any argument or narrative and such grounds should be numbered consecutively.
6. अिधिनयम क धारा 35 बी के उपब ध के अंतगत िनधा रत फ स जस थान पर पीठ थत है, वहां के कसी भी रा ीयकृत बक क शाखा से यायािधकरण क पीठ के सहायक र ज ार के नाम पर रेखां कत माँग ा ट के ज रए अदा क जाएगी तथा यह माँग ा ट अपील के प के साथ संल न कया जाएगा। The prescribed fee under the provisions of Section 35 B of the Act shall be paid through a crossed demand draft, in favour of the Assistant Registrar of the Bench of the Tribunal, of a branch of any Nationalized Bank located at the place where the Bench is situated and the demand draft shall be attached to the form of appeal.
7. यायालय शु क अिधिनयम, 1970 क अनुसूची-1, मद 6 के अंतगत िनधा रत कए अनुसार संल न कए गए आदेश क ित पर 5.00 पया का यायालय शु क टकट लगा होना चा हए। The copy of this order attached therein should bear a court fee stamp of Re. 1.00 as prescribed under Schedule 1, Item 6 of the Court Fees Act, 1970. 8. अपील पर भी . 5.00 का यायालय शु क टकट लगा होना चा हए। Appeal should also bear a court fee stamp of Rs. 5.00.
3 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 3 of 76
M/s. New Kishan Cement Pvt. Ltd., Shapar (hereinafter referred to
as “New Kishan”), named as Noticee No. 1 have been issued show cause notice
No. AE/D.II/AR-Shapar/COMMR/55/2011 dated 29.3.2011 (hereinafter
referred to as “notice”) asking them to show cause to this authority as to why:
(i) Cenvat credit amounting to Rs. 1,36,00,295/- should not be recovered
from them under rule 14 of the Cenvat Credit Rules,2004 (“CCR”) read
with proviso to section 11 A(1) of the Central Excise Act, 1944 (“Act”).
(ii) Rs. 1.08 crore deposited by them during the course of investigation
should not be appropriated and adjusted against the Cenvat credit
demanded as above.
(iii) Interest at appropriate rate should not be charged & recovered from them
under rule 14 of the CCR read with section 11AB of the Act.
(iv) Penalty should not be imposed upon them under rule 15 (2) of the CCR
readwith section 11AC of the Act.
2.1 The following noticees have been called upon to show cause as to
why:
i) Registration granted to them under rule 9 of the CCR should not be
revoked and cancelled.
ii) Penalty should not be imposed upon each of them under rule 26 of the
CCR.
Sl. Noticee Noticee No. (as per S.C.N.) 1. M/s. Hindustan Exports 3
2. M/s. Jayshree Vyapar Ltd. 8
3. M/s. Karan Chemicals 9
4. M/s. Karan Marketing 10
2.2 Further, the following noticees have been called upon to show
cause as to why penalty should not be imposed upon them under rule 26 of the
CCR:
4 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 4 of 76
Sl. Noticee Noticee No. (as per S.C.N.) 1. Shri Navneet G. Vadaliya,
Director of M/s. New Kishan
2
2. M/s. Kathiawad Industries 4
3. Shri Kuldipsinh Basiya, partner of
M/s. Hindustan Exports, Bharoodi
and M/s. Kathiawad Industries,
Bharoodi
5
4. Shri Rajan V. Vadaliya, Director of
M/s. New Kishan.
6
5. M/s. Radhey Vyapar Ltd. 7
6. M/s. Maruti Enterprise, Jamnagar 11
7. M/s. Samrat Cement, Hadamtala 12
8. Shri Ashok Vasani, Partner of M/s.
Samrat Cement, Hadamtala.
13
9. Shri Bhavin Pabari, Proprietor of
M/s. Radhey Vyapar Ltd.
14
10. M/s. Pyramid Portland Cement 15
11. M/s. Om Sai Ram Transport,
Jamnagar
16
12. Shri Pravin Bhanderi, Managing
Director of M/s. Pyramid Portland
Cement
17
13. M/s. Pratham Transport, Jamnagar 18
14. M/s. Nilkanth Cement 19
15. M/s. Kailash Cement Industries 20
16. M/s. Tapee Cement 21
17. Shri Khodidas Sojitra, Director of
M/s. Nilkant Cement
22
18. Shri Arvind Gangdas Sakhiya,
Partner of M/s. Tapee Cement
23
19. Shri Dhiraj Rangani, Partner of
M/s. Kailash Cement Industries
24
20. Shri Shashikant Koticha, Director of
M/s. Jayshree Vyapar Ltd.
25
21. Shri Gautam Patel, Partner of M/s.
Karan Marketing
26
5 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 5 of 76
22. Shri Chandrakant J. Patel, partner
of M/s. Karan Chemicals.
27
3. Brief facts of the case are as under:
3.1 Based on intelligence regarding clandestine removal of their
excisable product, namely, cement and wrong utilization of Cenvat credit on
one their inputs, namely, pet coke, the officers of Central Excise, Rajkot carried
out search of the premises of M/s. New Kishan on 26.4.2008.
3.2 During the search operation, the officers found unaccounted stock
of cement valued at Rs. 55,225/- and the same was accordingly placed under
seizure. The officers also found that M/s. New Kishan had shown stock of
1153.735 MT of pet coke in their Cenvat input account register (RG-23 Pt-I
register) and “nil” stock of coke dust/coke breeze/other coke (non-cenvatable
input) in their raw material register (Form IV register).
3.3 On 26.4.2008, the officers recorded statement of Shri Harsukhbhai
Siroya, Chief Chemist of M/s. New Kishan under section 14 of Central Excise
Act, 1944, wherein he, inter alia, stated that they used clinker to manufacture
ordinary Portland cement; that clinker was manufactured by using raw
material like lime stone (70-75%), clay (6-15%) and coke (11-12%).
3.4 On 26.4.2008, the officers also recorded statement of Shri
Kishorebhai Ramjibhai Soliya, Excise clerk of M/s. New Kishan under section
14 of Central Excise Act, 1944, wherein he, inter alia, stated that inputs were
received and entered in relevant registers like Form-IV and RG 23 registers;
that no records were maintained in respect of issuance of raw material used in
the manufacturing process; that the actual quantity of each raw material used
in the manufacture of OPC on any particular day was calculated on the basis of
total production of OPC on that day; that their chemist calculated the
consumption of each raw material on the basis of percentage of raw materials
contained in the total production of OPC on that day; that the chemist
intimated him about the consumption of each input used in manufacture of
total cement on any day of production through a slip/chit and after making
entry in the respective registers, he destroyed the said chits/slips; that the
inputs received in the factory were first weighed at the in-house weigh-bridge
and two slips were prepared out of which one slip was received by him for entry
6 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 6 of 76
in the form prescribed for “incoming input material report” and the other slip
was sent to the supplier in token of having received the same; that after
making entry in “incoming input material report”, the chits were destroyed by
him; that the said “incoming input material report” was also destroyed by him
after making entry in either Form-IV or RG 23-A register depending upon the
nature of inputs; that he did not cross check the physical receipt of goods at
the factory gate but only received the slips prepared at the factory gate; that he
had never taken the physical stock of cenvatable inputs recorded in the register
and hence, there were chances of variation in declared stock and the physical
stock.
3.5 On 26.4.2008, the officers also carried out search of the office
premises of M/s. New Kishan at Gondal Road, Rajkot and resumed certain
records.
3.6 On 26.4.2008, the officers searched the premises of M/s.
Hindustan Exports, Bharoodi and M/s. Kathiawad Industries operating from
the same premises. M/s. Hindustan Exports was a Central Excise registered
dealer of pet coke manufactured by M/s. Reliance Industries, Jamnagar and
was engaged in supply of pet coke (excisable goods) to M/s. New Kishan. M/s.
Kathiawad Industries was engaged in supply of coke dust/coke breeze, etc.
(non-excisable goods) to M/s. New Kishan. The officers recovered 3 cash memo
books bearing Nos. 01, 02 and 03 pertaining to M/s. Kathiawad Industries. On
inquiry, it was revealed that the books contained the office/duplicate copies of
proforma invoices (cash memos) in respect of sales/supply of coke dust/coke
breeze (non-cenvatable items) by M/s. Kathiawad Industries to various
customers, including M/s. New Kishan during the month of August,2008. The
officers also recovered certain weighment slips of coke dust/coke breeze from
the said premises. On scrutiny of the same, it was noticed that the white
coloured slips were in the name of M/s. New Kishan. Shri Kuldipsinh Basiya,
partner of M/s. Hindustan Exports and M/s. Kathiawad Industries informed
the officers that these weighment slips pertained to coke dust/coke breeze
supplied by them to M/s. New Kishan during the month of August,2008 under
proforma invoices and the saem were received by M/s. New Kishan after
weighment and chemical analysis for ascertaining ash content and moisture.
The officers resumed hard disc of computer found from the common premises
of M/s. Hindustan Exports and M/s. Kathiawad Industries under
panchanama-dated 26.4.2008. Verification of cash memo book Nos. 01, 02 and
7 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 7 of 76
03 of M/s. Kathiawad Industries revealed that they had supplied 1630.304 MT
of coke dust to M/s. New Kishan during a short span of about 3 weeks in
April,2008. Thus, it appeared that M/s. New Kishan was using coke dust in
their manufacturing process without reflecting the receipt of coke dust/coke
breeze in their Form-IV register.
3.7 On 26.4.2008, the officers recorded statement of Shri Kuldipsinh,
partner of M/s. Hindustan Exports & M/s. Kathiawad Industries, who inter
alia stated that they also purchased pet coke from M/s. Jayshree Vyapar,
Rajkot and M/s. Hindustan West Coast, Jamnagar and raised second stage
dealer’s invoice on M/s. New Kishan; that pet coke was transported to M/s.
New Kishan in the dumpers/vehicles in their own dumpers/vehicles and no
lorry receipts were prepared in this regard; that they prepared proforma invoice
and weighment slips for local supplies of coke dust/coke breeze, etc. for which
payments were received in cash; for all such invoices, they prepared
computerized weighment slip from their own weigh bridge; that the document
Nos. 61, 62 and 63 (book nos. 01, 02 and 03) withdrawn from M/s. Hindustan
Exports and M/s. Kathiawad Industries under panchnama-dated 26.4.2008
were the proforma invoices (cash memo) issued by M/s. Kathiawad Industries
to various customers; that these proforma invoices contained the details of
goods such as coke dust, coke breeze, iron (coke), coke and coal sold by them
to various customers including M/s. New Kishan and the respective weighment
slips attached to these proforma invoices showed the details of gross weight,
tare weight and net weight in respect of vehicles used for transporting the
goods; that the rate and amount were not mentioned in the proforma invoices
because they had an understanding with M/s. New Kishan that at the end of
the month, they were getting instructions from M/s. New Kishan to issue
invoice adjusting required quantity and after raising such invoices of adjusted
quantity, the proforma invoices and weightment slips were destroyed by them;
that the payment for the quantity of the goods covered under such invoices
raised as per instructions were received by cheques and for the balance
quantity, the payments were received by them in cash; that on settlement of
full payment of goods, the weighment slips and proforma invoices were
destroyed; that on an average, they supplied around 200-300 MT of coke
dust/coke breeze to both M/s. New Kishan and M/s. Major Cement Pvt. Ltd.
on a monthly basis; that the white coloured weighment slips were of M/s. New
Kishan; that the good supplied by them through proforma invoices were
received by M/s. New Kishan after weighment and chemical analysis,
8 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 8 of 76
ascertaining the ash content and moisture; that some of the weighment
slips/proforma invoices recovered during the search remained to be destroyed
for want of settlement of final payment.
3.8 In his statement-dated 27.4.2008, Shri Navneet Vadaliya, Director
of M/s. New Kishan, inter alia, stated that he looked after the day to day
functioning of M/s. New Kishan, such as receipt of raw material, production,
dispatch of goods, etc.; that the job of marketing and sales was looked after by
another Director M/s. Rajan Vadaliya; that the raw material was received only
after weighment and chemical analysis; that 2 slips were prepared at
weighbridge out of which one slip was returned to the supplier; that the
cenvatable raw material was recorded in part-I and II registered while the other
inputs were recorded in form-IV register; that the approximate quantity of pet
coke would be 1150 to 1200 MT whereas gypsum would be in the range of 600
to 625 MT; that though they have no system in their factory for recording day-
to-day quantity of pet coke, etc. used in the manufacturing process, the
physical stock lying in the factory premises would tally with the corresponding
entry in the registered.
3.9 During the period from 26.4.2008 to 1.5.2008, weighment of
inputs claimed by M/s. New Kishan as pet coke lying in the factory was carried
out and a shortage of 20 MT approx. was noticed. On 2.5.2008, the officers
took representative samples of inputs claimed as pet coke which were sent for
testing by National Small Industries Corporation Ltd. (A Government of India
Enterprise), Technical Services Centre, Rajkot. Manager (Testing), NSIC, vide
test report 7.5.2008 forwarded test report No. 10858 dated 7.5.2008 and
confirmed that sample was coke dust and not pet coke.
3.10 On 28.5.2008, the officers recorded statement of Shri Rajan
Vadaliya, Director of M/s. New Kishan, wherein, he inter alia stated that they
used cenvatable inputs like pet coke and HDPE bags; that they received pet
coke from M/s. RIL, Jamnagar through various dealers like M/s. Hindustan
Exports, M/s. Radhe Vyapar Ltd., Rajkot, M/s. Karan Chemicals, Ahmedabad
and M/s. Karan Marketing.
3.11 On the basis of test report, it appeared that the stock of 1153.735
MT goods shown as pet coke (cenvatable input) was not pet coke but coke dust
and non-accountal of coke dust supplied by M/s. Kathiawad Industries in the
9 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 9 of 76
Form-IV register by M/s. New Kishan was on account of the fact that 1153.735
MT of pet coke shown in RG 23 Pt.-I was on the strength of mere paper
transactions only, i.e. by obtaining cenvatable invoices without procuring any
pet coke from the abovenamed dealers.
3.12 The details of cenvat credit availed by M/s. New Kishan during the
period from 2006-07 to 2008-09 (upto 31.5.2008) is as under:
3.13 On 4.6.2008, computer hard disc withdrawn from the common
premises of M/s. Hindustan Exports and M/s. Kathiawad Industries on
26.4.2008 was opened in the presence of their partner Shri Kuldipsinh Basiya
and pancha witnesses. Print-out taken from the hard disc revealed that during
the period from November,2006 to January,2008, M/s. New Kishan and M/s.
Major Cement Pvt. Ltd., Shapar (which are sister concerns), they had supplied
a total quantity of 22102.39 MT of coke dust ( as per details contained in table
appearing on page 8 of the notice). However, M/s. New Kishan had shown
receipt of only 1563.805 MT of coke dust/other coke in the form IV register
maintained by them.
3.14 In his further statement-dated 15.5.2008, Shri Kuldipsinh Basiya,
partner of M/s. Hindustan Exports, inter alia, stated that he was also a partner
of M/s. Kathiawad Industries, a manufacturer-cum-dealer of various types of
coal; that no trading of excisable goods was carried out by M/s. Kathiawad
Industries; that for pet coke, they issued cenvatable invoice of M/s. Hisdustan
Exports only; that pet was purchased from M/s. Radhe Vyapar Ltd., a 1st stage
dealer of M/s. Reliance Industries Ltd.; that on receipt of verbal orders from
M/s. New Kishan, they placed order on M/s. Radhe Vyapar Ltd., who, in turn
supplied the required quantity; that the trucks were unloaded without any
weighment and without making entries in any register; that after unloading,
the said quantity of pet coke was again loaded in their own dumpers/vehicles
and sent to M/s. New Kishan without weighment or entry in any register; that
only corresponding invoice of M/s. Hindustan Exports was prepared by adding
Rs. 60 to Rs. 80/- per MT in the value of pet coke as a commission; that
Sr. No. Year Cenvat credit 1. 2006-07 38,55,593/- 2. 2007-08 70,03,022/- 3. 2008-09 (upto 31.05.2008) 27,41,677/-
Total------------------------------------- 1,36,00,292/-
10 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 10 of 76
though in his earlier statement, he had stated that they supplied about 200 to
300 MT of coke dust/coke breeze to M/s. New Kishan and M/s. Major Cement
Pvt. Ltd., Shapar, on perusing the details of Annexure-I to F. No. 48, he
confirmed that they supplied about 1500 to 2000 MT of coke dust/coke breeze
to M/s. New Kishan and M/s. Major Cement on a monthly basis; that on being
shown file No. 32 containing original invoices meant for M/s. New Kishan and
M/s. Major Cement withdrawn during the search of the premises of M/s.
Hindustan Exports on 26.4.2008, he stated that the same were sent by M/s.
New Kishan and M/s. Major Cement to them for changing the vehicle numbers
mentioned therein as it was at the request of Shri Rajan Vadaliya that they
required only Cenvatable invoices only of pet coke and hence, he diverted the
goods to other customers and issued cenvatable invoices in the name of M/s.
New Kishan by wrongly mentioning the number of his own vehicle on the said
invoices to camouflage the transportation; that M/s. New Kishan and M/s.
Major had instructed him to change the vehicle numbers and to follow the
same procedure in future also; that his customers outside the State did not
require cenvatable invoices of pet coke and hence, he diverted the said goods to
those customers and supplied only cenvatable invoices to M/s. New Kishan;
that the payments in this regard were received through cheques from M/s. New
Kishan and after encashing the same, he used to return the cheque amount to
M/s. New Kishan in cash; that he used to get a commission of Rs. 75/- per ton
on such transactions and the same was deducted by him during handing over
the cash to them.
3.15 On 10.6.2008, the officers recorded the statement of Shri Bipin
Patel, weighbridge in-charge of M/s. New Kishan, wherein, he, inter alia, stated
that goods received from M/s. Hindustan Exports were received under
challans/proforma invoices which were weighed and two copies of weighment
slips were prepared mentioning therein the net weight, tare weight, date,
vehicle no. and one copy of weighment slip was returned to the driver after
signing the same and the other copy was sent to their office; that in the
weighment slips, he used to mention the nature of cargo on the basis of
description of goods mentioned in challans/proforma invoices and also after
getting confirmation of test report from the laboratory; that if pet coke was
mentioned in the challan and the laboratory person confirmed the same after
testing, he used to mention pet coke and for coke dust/coke breeze, he had
mentioned coke dust; that majority of trucks from M/s. Hindustan Exports and
M/s. Kathiawad Industries arrived with coke dust and sometimes pet coke was
11 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 11 of 76
also received; that on being shown file No. 64 withdrawn from the premises of
M/s. Hindustan Exports (page Nos. 7,9,11 containing eight weighment slips),
he stated that these slips were prepared by him on 4.5.2008/5.5.2008 in
respect of coke dust received by M/s. New Kishan; that on an average, three to
four trucks carrying coke dust were received every day from M/s. Hindustan
Exports.
3.16 Further statement of Shri Kuldipsinh Basiya, partner of M/s.
Hindustan Exports and M/s. Kathiawad Industries was recorded on 13.6.2008,
wherein, he, inter alia, endorsed the documents retrieved from the hard disc of
their firm’s computer withdrawn under panchanama-dated 26.4.2008 and kept
in a file containing page Nos. 01 to 69 and confirmed that the details belonged
to their firm only. He inter alia stated that page Nos. 19 to 69 contained the
details of month-wise supply of coke dust/fine to M/s. New Kishan and M/s.
Major Cement from November,2006 to January,2008; that supply of coke
dust/fine to M/s. New Kishan and M/s. Major Cement was done in the name of
“K.C.” only and K.C. (Kishan Cement) is the short name of M/s. New Kishan;
that they had relation only with Shri Rajan Vadaliya, Director of M/s. New
Kishan; that Shri Rajan Vadaliya used to place orders for both companies, i.e.
M/s. New Kishan and M/s. Major Cement; that Shri Rajan Vadaliya decided
where the coke dust/coke breeze was to be unloaded; that they were supplying
coke dust/fine to these parties from December,2005 onwards on the basis of
an open order for the supply of same subject to specification of coke dust
required by them; that page Nos. 1 to 17 contained the details of purchase and
sale of pet coke and the said details were their private records of purchase and
sale of pet coke; that pet coke purchased by them was not only supplied to
M/s. Hindustan Exports and M/s. Major Cement but also to other parties like
M/s. Samrat Cement, Hadamtala and P. P. Enterprise; that P. P. Enterprise
was a code word used by them for showing the diversion of pet coke to parties
outside the State; however, they used to issue excisable invoice of all the pet
coke in the name of M/s. Hindustan Exports and M/s. Major Cement only; that
they were diverting the pet coke to other parties on the bill of M/s. New Kishan
and M/s. Major Cement; that it was done on the instruction of Shri Rajan
Vadaliya as they required cenvatable bill only.
3.17 On 1.10.2008, the officers recorded statement of Shri Ashokbhai
Dhirubhai Vasani, partner of M/s. Samrat Cement, Haramtala, wherein, he,
inter alia, stated that they are engaged in manufacture of Ordinary Portland
12 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 12 of 76
cement (OPC) 53 grade; that on being shown the details of data retrieved from
the computer hard disc of M/s. Hindustan Exports and M/s. Kathiawad
Industries in which 6 trucks of pet coke were shown as diverted by Shri
Kuldipsinh to them, he admitted that he had purchased the said truck loads in
cash payments without any bills; that thus, they did not account for the same
in their books of account.
3.18 On 13.5.2008, the officers intercepted one truck No. GJ-10-W
7484 that was coming out of the godown premises of M/s. Radhey Vyapar Ltd.,
Vavdi, Near Krishna Park, N. H. 8, Rajkot-Gondal Road, Rajkot. On inquiry
with the truck driver Shri Shabbir, it was revealed that the truck was loaded
with pet coke from M/s. Reliance Indusries Ltd. and was required to be
unloaded at the premises of M/s. Pyramid Portland Cement, Hadamtala, as per
the directions of Shri Bhavinbhai, Proprietor of M/s. Radhey Vyapar Ltd. Upon
asking for the invoices and other documents, the driver produced a hand
written chit issued by M/s. Radhey Vyapar and stated that all such documents
were lying at the godown. Accordingly, the godown premises of M/s. Radhey
Vyapar Ltd. was searched in the presence of panchas. During the search, lorry
receipt No. 1564 dated 12.5.2008 for invoice No. 1065742 issued by M/s.
Reliance Industries Ltd. indicating the name of the buyer as M/s. Radhey
Vyapar Ltd. and that of consignee as M/s. New Kishan Ltd. was recovered.
Thus, it appeared that pet coke consigned to M/s. New Kishan Ltd. were being
diverted to M/s. Pyramid Portland Cement. A few similar lorry receipts and
invoices of M/s. Reliance Industries of earlier period were also recovered. The
said records were placed under seizure on 13.5.2008 and the truck bearing No.
GJ-10-W 7484 valued at Rs. 14,00,000/- and 16.540 MT pet coke valued at
Rs. 1,22,131/- were detained and handed over to the depot in-charge of M/s.
Radhey Vyapar Ltd. Later on, the truck and pet coke was placed under seizure
under a reasonable belief that the same was liable to confiscation.
3.19 In his statement-dated 13.5.2008, Shri Shabbir Hussain Sheikh,
truck driver, inter alia, stated that the truck was owned by his father and was
engaged in transportation of pet coke from M/s. RIL, Jamnagar to various
destinations under a transport company namely M/s. Om Sairam Transport
Company, Jamnagar; that he had loaded 16.54 MT of pet coke from M/s.
Reliance Industries Ltd., Khavdi, Jamnagar on the direction of M/s. Radhey
Vyapar and as per the directions, he went to the godown of the said M/s.
Radhey Vyapar situated at plot No. 34/35, Vavdi; that he gave the copy of
13 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 13 of 76
invoice issued by M/s. Reliance Industries Ltd. and copy of lorry receipt issued
by the transporter M/s. Om Sairam Transport, Jamnagar to Shri Ajaybhai of
M/s. Radhey Vyapar; that Shri Ajay retained the invoice/copy of lorry receipt
and gave him a kutcha chit with a direction to deliver the goods at the
premises of M/s. Pyramid; that the details mentioned in the kutcha chit were
the name and address of M/s. Pyramid; that he did not possess any other
document except the said kutcha chit, when intercepted; that he regularly
came to M/s. Radhey Vyapar with the truck load in similar manner which was
about 15 to 18 times a month and every time, he was issued kutcha chit for
delivery at the premises of M/s. Pyramad, where it was unloaded; that he used
to get payment @ Rs. 315/- PMT from M/s. Pyramid; that since last three
months, he had been delivering the pet coke in the premises of M/s. Pyramid
in similar fashion.
3.20 In his statement-dated 13.5.2008, Shri Ajay Pabari, depot in-
charge of M/s. Pyramid, inter alia, endorsed the statement of Shri Shabbir,
driver of truck No. GJ-10-W-7484 and stated that his brother (Shri
Bhavinbhai) was the proprietor of M/s. Radhey Vyapar; that both of them were
looking after the work of M/s. Radhey Vyapar; that he looked after the work at
the depot of the firm at Vavdi; that as per the direction of his brother, he had
prepared kutcha chit in respect of truck No. GJ-10-W-7484 and had asked the
driver to deliver the goods at the premises of M/s. Pyramid.
3.21 On 13.5.2008, the officers searched the premises of M/s. Radhey
Vyapar at Star Plaza, Rajkot and seized several documents including a red
coloured diary containing the details of dispatches made by M/s. Radhey
Vyapar during the month of April,2008.
3.22 On 13.5.2008, the officers recorded statement of Shri Bhavinbhai
Pabari, Proprietor of M/s. Radhey Vyapar, wherein, he, inter alia, stated that
M/s. Radhey Vyapar was engaged in trading of pet coke purchased from M/s.
Reliance Industries Ltd., Khavdi and was not registered with Central Excise
department; that thus, they did not pass Cenvat credit to their excisable
customers; that to pass Cenvat credit, they used to request M/s. RIL to prepare
invoice by mentioning the name of buyer as M/s. Radhey Vyapar and the name
of the excisable unit as the consignee; that in such case, M/s. RIL dispatched
the goods directly to the consignees with Central Excise invoice (transporter
copy and extra copy) and the original copy was sent to them; that such
14 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 14 of 76
customers availed Cenvat credit on the transporter copy of invoices; that
however, on receipt of original copy of invoices, they used to issue
corresponding commercial invoices by adding their profit in the name of such
customers and kept the original copy with them for record; that their main
customers were cement manufacturers, emery powder manufacturers and lime
stone industries; that as per requirement of their customers, they placed order
to M/s. RIL with advance payments; that he admitted that they were supplying
only Central Excise invoices of pet coke to M/s. New Kishan and M/s. Major
Cement and the corresponding goods were diverted to some other cement
manufacturers like M/s. Pyramid, etc.; that the details of such supplies for the
last 15 trucks were mentined on page No. 73 of the red colour diary recovered
during the search and mentioned at Sl. No. 1 of the seized documents of
panchanama-dated 13.5.2008; that for supply of pet coke to M/s. New Kishan
and M/s. Major Cement, he generally requested M/s. RIL to dispatch the goods
directly to them but he was not aware whether the goods consigned to M/s.
New Kishan and M/s. Major Cement were delivered directly or otherwise, but
as far the said 15 trucks were concerned, they had directed the truck drivers to
deliver the goods to M/s. Pyramid only; that Shri Mansukhbhai Patel, Director
of M/s. Major Cement asked him to send only the invoices on behalf of M/s.
New Kishan and M/s. Major Cement and as per his request, they supplied only
the invoices; that they received the payments by cheques for the goods
supplied to these manufacturers but for the said 15 trucks, they have not
received the payment; that they expect the payment in this regard from M/s.
New Kishan and M/s. Major Cement and after receiving the cash from M/s.
Pyramid, he would return the cash to M/s. New Kishan and M/s. Major
Cement; that Shri Jamanbhai from M/s. Pyramid informed him that they did
not require any invoice and were concerned with only goods for which they
would pay in cash; that till date, he had dispatched about 273.120 MT of pet
coke to M/s. Pyramid where the invoices were in the name of either M/s. New
Kishan or M/s. Major Cement; that out of 273.120 MT of pet coke, he had
given invoices for 128.650 MT to M/s. Major Cement and invoices for 144.470
MT to M/s. New Kishan; that he had supplied invoices to maintain relationship
with the customers and for this, he received a consideration of Rs. 80/- PMT as
profit.
3.33 Shri Pravin Bhanderi, Managing Director of M/s. Pyramid, in his
statement-dated 14.5.2008 stated, inter alia, that he looked after the entire
work related to the unit; that his unit was engaged in the manufacture of 53
15 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 15 of 76
grade cement; that they were procuring pet coke from M/s. Radhey Vyapar;
that they had purchased about 5 to 7 trucks without bills from M/s. Radhey
Vyapar during the earlier week; that pet coke received from M/s. Radhey
Vyapar was accompanied with delivery challan or kutcha chits on which name
of their unit, quantity, grade, etc. was mentioned.
3.34 On 21.5.2008, the officers recorded statement of Shri Mohmad
Rafik Gulamhussein Dal, proprietor of M/s. Om Sai Ram Transport, wherein,
he inter alia accepted the facts stated by Shri Shabbir Hussein Sheikh, truck
driver in his statement. He further staed that Shri Bhavin Pabari, proprietor of
M/s. Radhe Vyapar first placed the order with M/s. Reliance Industries Ltd.
and deposited the money and intimated him the delivery order number and
name of the consignee for whom the truck was required to be loaded; that on
the basis of delivery order, he prepared lorry receipt mentioning therein the
name of the consignee and sent trucks for loading pet coke at M/s. RIL and
delivered the same to the respective consignee; that on an average, he used to
send 10 trucks of pet coke to M/s. Pyramid on monthly basis; that sometimes,
Shri Bhavin Pabari instructed him to deliver the truck to their depot at Vavdi,
Rajkot; that in such cases, the lorry receipts and copy of invoices were retained
by M/s. Radhey Vyapar and in turn kutcha chit was given with a direction to
deliver the loaded goods to the address mentioned in the said kutcha chit; that
he received the payments towards transportation from M/s. New Kishan and
M/s. Major Cement through cheques only; that in respect of diverted goods, he
received the payments in cheques from the party whose name was mentioned
as consignee in the lorry receipt; that generally, the receipt of goods was
endorsed on the respective copy of lorry receipts, however, in case of diverted
goods, the same was taken over by M/s. Radhey Vyapar and was returned by
courier after three to four days having received the endorsement of either M/s.
New Kishan or M/s. Major Cement.
3.35 Further statement of Shri Bhavinbhai Pabari was recorded on
21.5.2008, wherein, he inter alia stated that the copies of (1) L. R. No.
1559/12.05.08 for invoice No. 1065618 (2) L. R. No. 1560/12.05.08 for invoice
No. 1065626 (3) L. R. No. 1563/12.05.08 for invoice No. 1065625 (4) L. R. No.
1564/12.05.08 for invoice No. 1065742 that were recovered during the search
of the premises of their godown at Vavdi on 13.5.2008 were in respect of pet
coke loaded on the trucks of M/s. Om Sai Ram Transport, Jamnagar from M/s.
RIL, Khavdi out of which Sl. No. (1) and (2) were consigned in the name of M/s.
16 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 16 of 76
Major Cement while Sl. No. (3) and (4) were consigned in the name of M/s. New
Kishan; that the copies of lorry receipts and corresponding invoices were
retained by them and in its place, they have issued kutcha chits for delivery to
the premises of M/s. Pyramid; that the lorry receipt mentioned at Sl. No. (4)
above was for truck No. GJ-10-W-7484, which was intercepted by the officers
of the Department; that the remaining three trucks had gone to the premises of
M/s. Pyramid, however, they refused to accept the said three trucks as they
had got the information that the officers had intercepted one of their truck on
that day, i.e. 13.5.2008; that the drivers of the said three trucks then went to
the premises of M/s. Major Cement and M/s. New Kishan respectively,
however, they refused to accept the trucks for want of original lorry
receipts/invoices as they were also aware of interception of one trucks by the
Excise officers; that if the truck No. GJ-10-W-7484 had not been intercepted on
that day, they would have delivered all the goods at the premises of M/s.
Pyramid as per existing practice and would have supplied the cenvatable
invoices to M/s. Major Cement or M/s. New Kishan; that Shri Mansukhbhai
had requested him to send the cenvatable invoices only.
3.36 On 18.6.2008, the officers searched the office premises of M/s.
Partham Transport and resumed various documents including dispatch note
books (daily registers) for the period from 26.4.2006 to 31.3.2008 containing
the details of pet coke dispatched by them to various customers including M/s.
New Kishan.
3.37 On 19.6.2008, statement of Shri Manoj Virani, proprietor of M/s.
Partham Transport was recorded under section 14 of the Central Excise Act,
1944, wherein, he inter alia stated that his transport company was engaged in
transportation of pet coke from M/s. RIL, Jamnagar on behalf of various
parties but mainly of M/s. Jayshree Vyapar since last 4 years; that he used to
keep private records of all the trucks dispatched by him in a day in the daily
dispatch registers; that he disclosed the names of the customers of M/s.
Jayshree Vyapar; that drivers informed him that the goods sent to M/s. New
Kishan were delivered to other places.
3.38 On 25.6.2008, statement of Shri Khodidasbhai Sojitra, Director of
M/s. Nilkanth Cement, Haramtala was recorded under section 14 of the
Central Excise Act, 1944, wherein, he inter alia stated that his unit was
engaged in manufacture of 53 grade cement since 2006-07; that annual
17 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 17 of 76
turnover of his unit for the year 2006-07 was Rs. 25 lakh and for the year
2007-08 was Rs. 1.30 crore; that his unit was not registered with Central
Excise; that they procured pet coke from M/s. Jayshree Vyapar with bill as well
as without bill; that the payment for the billed quantity was made by cheques
whereas payments for unbilled quantity was made in cash; that Shri
Satishbhai or Shri Kamleshbhai of M/s. Jayshree Vyapar first asked him
whether he required the goods under bill or otherwise; that the rates of goods
sold without bill were less; that on finalization of the deal, they sent the truck
load from Jamnagar alongwith kutcha chit mentioning the name of Shri
Mansukhbhai, etc. and other truck details like truck number, weight of pet
coke and freight etc., that the truck after weighment was offloaded at his
factory premises and freight payment was made in cash to the driver of the
truck; that after three or four days, he made cash payment of goods to Shri
Satishbhai Parekh or Shri Kamleshbhai of M/s. Jayshree Vyapar; that on an
average, he received 5 to 10 truck loads of pet coke from M/s. Jayshree Vyapar
out of which bills were made for 2 to 3 truck loads only.
3.39 On 24.6.2008, statement of Shri Arvind Gangdasbhai Sakhiya,
partner of M/s. Tapee Cement, Metoda was recorded under section 14 of the
Central Excise Act, 1944, wherein, he inter alia stated that their unit was
engaged in the manufacture of OPC for the last four years; that their factory
was registered with Central Excise Department and availing the benefit of
exemption notification No. 8/2003; that they procured pet coke from M/s.
Radhey Vyapar and M/s. Jayshree Vyapar; that they procured pet coke from
M/s. Radhey Vyapar on regular bills and without bill from M/s. Jayshree
Vyapar; that the entire procurement of pet coke from M/s. Jayshree Vyapar
was without bills; that he gave his requirement to Shri Satishbhai of M/s.
Jayshree Vyapar who sent the truck after one or two days; that a kutcha chit
mentioning the name of Shri Arvindbhai Bhathawala or Shri Mansukhbhai
Bhathawala came alongwith truck; that he made the payment of goods and
freight charges in cash to the truck driver; that they have stopped procuring
goods from M/s. Jayshree Vyapar since last eight months.
3.40 On 24.6.2008, statement of Shri Dhiraj Rangani, partner of M/s.
Kailash Cement, Metoda was recorded under section 14 of Central Excise Act,
1944, wherein, he inter alia stated that their unit was engaged in manufacture
of OPC for the last four years and their factory was registered with Central
Excise Department; that they procured pet coke from M/s. Radhey Vyapar on
18 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 18 of 76
regular basis and without bills from M/s. Jayshree Vyapar; that the entire
procurement of pet coke from M/s. Jayshree Vyapar was without bills; that he
gave his requirement to Shri Satishbhai of M/s. Jayshree Vyapar who sent the
truck after one or two days; that a kutcha chit mentioning the name of Shri
Rajesh Bhathawala or Shri Kamleshbhai Bhathawala or Shri Premji
Bhathawala came alongwith the truck; that he made the payment of goods in
cash to Shri Satishbhai and freight charges in cash to the truck driver; that
they procured 5 to 7 truck loads of pet coke from M/s. Jayshree Vyapar
without cover of bills during a month.
3.41 On 2.7.2008, the officers searched the office and godown premises
of M/s. Jayshree Vyapar and resumed relevant documents.
3.42 On 2.7.2008, statement of Shri Satish Parekh, Manager-cum-
godown-in-charge of M/s. Jayshree Vyapar was recorded under section 14 of
Central Excise Act, 1944, wherein, he inter alia stated that he was working
with M/s. Jayshree Vyapar since last 25 years; that his job was to receive
orders from various parties and give delivery as per the direction from his
office; that their firm was dealing in trading of pet coke and other items; that
pet coke was supplied to M/s. New Kishan, M/s. Major Cement, Shri
Maheshbhai Bhathawala, Shri Kamleshbhai Bhathawala, Shri Bharatbhai
Bhathawala, etc.; that he did not know the addresses of their clients but was
dispatching the goods on the direction of his owner Shri Shashikantbhai or
Shri Kamleshbhai; that the original invoice of M/s. RIL alongwith LR was
retained by him and subsequently sent to his office; that he did not recollect
having supplied any other coal, except pet coke to M/s. New Kishan.
3.43 On 18.9.2008, statement of Shri Sashikant Koticha, Director of
M/s. Jayshree Vyapar Ltd. was recorded under section 14 of the Central Excise
Act, 1944, wherein, he inter alia stated that he is the Director of the said firm
which is duly registered with Central Excise Department; that he is looking
after the entire dealings of the said firm; that their firm is engaged in trading of
various items including pet coke and other coke; that their firm is a registered
dealer of M/s. RIL, Jamnagar since its inception in 1998; that they procured
pet coke from M/s. RIL on excisable invoices only; that their transport
company, namely, M/s. Partham Transport, Jamnagar used to receive pet coke
from M/s. RIL, Jamnagar on their behalf; that they sold pet coke on three
invoices, namely, retail invoices issued to the retail customers, tax invoices
19 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 19 of 76
issued to the customers registered with Sales Tax Department or having TIN
number and excisable invoices issued to the manufacturer/dealer registered
with Central Excise Department and to whom they passed on the cenvat credit;
that at the request of their customers, they facilitated them by providing pet
coke without bill and collected payment only in cash for such sales; that to
accommodate the quantity of legitimate sales of pet coke, they used to issue
retail as well as tax invoice to the same customer and payments for retail sales
were collected in cash whereas for tax invoices, the same were in cheques only;
that they provided cenvatable invoices to M/s. New Kishan and respective pet
coke consignments were diverted to other customers, i.e. mini cement plants in
Rajkot during 2006-07 at the request of Shri Manuskhbhai, partner of M/s.
Major Cement; that they did so to maintain business relations with them; that
he admitted of having misused the status of registered dealer.
3.44 It appeared from invoices of M/s. Karan Chemicals and M/s.
Karan Marketing, both of Ahmedabad that they took the services of M/s.
Maruti Enterprise, Jamnagar for carrying and supplying pet coke to M/s. New
Kishan. It further appeared that the lorry receipts issued by the said M/s.
Maruti Enterprise showed the names of consignor as M/s. Karan Chemicals
and M/s. Karan Marketing but the goods were being sent directly to M/s. New
Kishan from Jamnagar.
3.45 On 27.5.2008, statement of Shri Dipak Thakashibhai Sayani,
commission agent of M/s. Maruti Enterprise was recorded under section 14 of
the Central Excise Act, 1944, wherein, he inter alia stated that M/s. Maruti
Enterprise was owned by Shri Gautambhai Patel, Jagat Patel and Chandrakant
Patel, where were also owners of M/s. Karan Marketing, M/s. Karan Chemicals
and M/s. Karan Logistics, Ahmedabad; that the said transport company is
engaged in transportation of pet coke/sulphur on behalf of M/s. Karan
Chemicals and M/s. Karan Marketing and the freight charges were handled by
M/s. Karan Logistics; that the lorry receipts were pre-printed; that as per the
directions of the owners of M/s. Karan Chemicals and M/s. Karan Marketing,
pet coke was supplied to various parties including M/s. New Kishan directly
from Jamnagar; that the pet coke supplied to M/s. New Kishan or to M/s.
Major Cement, Shapar were recorded in the name of M/s. Major Cement only
as according to him, both M/s. New Kishan and M/s. Major Cement were
involved in diversion of pet coke as they had to offload the cargo at other places
on the instructions of responsible persons of both the companies, however, the
20 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 20 of 76
receipts were given by M/s. New Kishan and M/s. Major Cement on the
returnable copies of lorry receipts; that in such cases, the extra transportation
cost was paid by M/s. New Kishan and M/s. Major Cement directly to the
drivers; that based on the instructions received from the owners of M/s. Karan
Chemicals and M/s. Karan Marketing, he destroyed the record of earlier period
of M/s. Maruti Marketing.
3.46 Statements of Shri Gautam Jamnadas Patel, partner of M/s. Karan
Marketing were recorded on 17.10.2008 and 22.10.2008 under section 14 of
the Central Excise Act, 1944, wherein, he inter alia stated that they were
supplying pet coke to M/s. New Kishan since November,2007; that before that,
M/s. Karan Chemicals was supplying the same to them; that he could not say
for sure that the goods dispatched by them would have been delivered to M/s.
New Kishan; that however, on seeing the statement of Shri Dipakbhai Sayani,
commission agent of their transport company, he admitted that M/s. New
Kishan might be diverting the goods to other places with the help of their
transporters and drivers; that since they were receiving the receipts of the
goods from M/s. New Kishan in terms of duplicate copy of lorry receipts and
also confirmation of receipts on phone with a request for preparing invoices in
the name of either M/s. New Kishan or M/s. Major Cement, they did not bother
much about the diversion; that they purchased the pet coke from M/s. RIL and
sent the same to M/s. New Kishan directly from Jamnagar; that they did not
have any idea about where to deliver the goods and hence, directed the
transporter to deliver the goods at Shapar; that the authorized persons of M/s.
New Kishan or M/s. Major Cement used to instruct the truck drivers to deliver
the goods at their desired places; that they endorsed the duplicate copies of the
lorry receipts in token of receipts of the goods either in the name of M/s. New
Kishan or M/s. Major Cement and handed over the same to the driver of the
truck which was ultimately received by them; that on seeking the endorsement,
they understood that the goods were delivered to M/s. New Kishan or M/s.
Major Cement and in the meantime, they got instruction to prepare the
invoices in the name of either M/s. New Kishan or M/s. Major Cement; that he
did not know whether the pet coke was delivered to the said M/s. New Kishan,
M/s. Major Cement or somewhere else; that they received the payment through
cheques only.
3.47 Statements of Shri Chandrakant Jamnadas Patel, partner of M/s.
Karan Chemicals were recorded on 17.10.2008 and 22.10.2008 under section
21 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 21 of 76
14 of the Central Excise Act, 1944, wherein, he inter alia stated that he was
one of the partners of M/s. Karan Chemicals; that his firm was engaged in
trading of pet coke and sulphur; that they were registered dealers of M/s. RIL,
Jamnagar for trading of pet coke and sulphur; that their firm was registered
with the Central Excise department since 2006; that they started trading of pet
coke from Janurary,2007; that they were supplying pet coke to M/s. New
Kishan since January,2007; that he could not say for sure that pet coke
dispatched by them would have been delivered to M/s. New Kishan; that
however, on seeing the statement of Shri Dipakbhai Sayani, commission agent
of their transport company, he admitted that M/s. New Kishan might be
diverting the goods to other places with the help of transporter/drivers; that
since they were receiving the receipts of the goods from M/s. New Kishan in
terms of duplicate copy of lorry receipts and also confirmation of receipts on
phone with a request for preparing invoices either in the name of M/s. New
Kishan or M/s. Major, they did not bother much about the diversion; that they
purchased pet coke from M/s. RIL and sent the same to M/s. New Kishan
directly from Jamnagar; that they did not have any idea about where to deliver
the goods and hence, directed their transporter to deliver the goods at Shapar;
that the authorized persons of M/s. New KIshan or M/s. Major directed the
truck drivers to deliver the goods at desired places; that they endorsed the
duplicate copies of the lorry receipts in token of receipts of the goods either in
the name of M/s. New Kishan or M/s. Major and handed over to the driver of
the truck which were ultimately received by them; that on seeing the
endorsement on duplicate copy of lorry receipt, they understood that the goods
were delivered either to M/s. New Kishan or M/s. Major Cement; that in the
meantime, they got instruction to prepare the invoices in the name of either
M/s. New Kishan or M/s. Major Cement; that he did not know whether pet
coke was delivered to the said M/s. New Kishan, M/s. Major Cement or
somewhere else; that they received the payment through cheques only.
3.48 Statements of Shri Rajan Vadaliya, Director of M/s. New Kishan
(Noticee No. 6) were recorded on 6.10.2008, 7.10.2008, 8.10.2008, 10.10.2008
and 14.10.2008. The gist of his statements narrated in para 23 of the show
cause notice is as under:
he endorsed the Panchnama dated 26.04.2008 drawn at the premises of
noticee No. 1, the statement dated 26.04.2008 of Shri Hasmukh Siroya,
Chief Chemist; the statement dated 26.04.2008 of Shri Kishorebhai Soliya,
22 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 22 of 76
clerk; the statement dated 27.04.2008 of noticee No. 2 (Shri Navneet
Vadaliya, Director of M/s. New Kishan) and Panchanama dated
26.04.2008 drawn at the office premises of noticee No. 1;
he admitted that the weighment slips contained at page Nos. 7,8,11 in file
No. 64 withdrawn from the premises of noticee Nos. 3 and 4 indicating the
receipt of coke dust/coke breeze were prepared by his weighment incharge
Shri Bipinbhai, however, the goods mentioned there as coke dust were not
coke dust but the same was iron.
he was not having any written proof showing the receipts of iron from
noticee No. 4 as the said purchase from noticee No. 4 was free of cost and
he had only paid the transportation charges in cash;
he admitted that the stock of other coke as on 26.04.2008 in their Form-IV
register was nil since 23.11.2007 and that the quantity of coke dust
received by noticee No. 1 were not shown in Form IV register as the same
were received free of cost from the noticee Nos. 3 or 4 without bill in small
quantity and hence, not reflected in the records;
he agreed to the Panchnama dated 02.05.2005 drawn at the factory
premises in respect of drawal of representative samples, however, he did
not agree with the test report dated 07.05.2008 of NSIC, Technical
Services Centre (The National Small Industries Corporation Ltd.) - a
Government of India Enterprise, as per which the sample was of coke dust
and not pet coke.
he admitted the mistake on his part as well as on the part of his Chemist,
his clerk and noticee No. 2 in their statements recorded earlier as regards
not mentioning the usage of iron in the manufacturing process;
he stated that he was not in a position to give proof of his negation in
respect of the data taken from the computer hard disc of noticee Nos. 3
(M/s. Hindustan Exports, Bharoodi) and 4 (M/s. Kathiawad Industries,
Bharoodi) showing the supply of coke dust from 1.11.2006 to 31.1.2008,
file No. 64, 48, proforma invoices as per documents mentioned at Sr. Nos.
61, 62, 63 in Annexure to Panchanama dated 26.04.2008 drawn at the
premises of noticee Nos. 3 and 4, statements dated 26.04.2008,
23 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 23 of 76
15.05.2008 and 13.06.2008 of noticee No. 5 (Shri Kuldipsinh Basiya,
partner of M/s. Hindustan Exports, Bharoodi & M/s. Kathiawad
Industries, Bharoodi).
he admitted the procurement of coke dust through the proforma invoices
Nos. 6131, 6132, 6136, 6137, 6138 and 6139 all dated 17.04.2007 of
noticee Nos. 4 having corresponding entries in data taken out for the
period November-2006 to 31.01.2008 from the computer hard disc of
noticee Nos. 3 and 4 withdrawn from the computer hard disc of noticee
Nos. 3 and 4 withdrawn from the premises of noticee Nos. 3 and 4,
however, he did not agree with the details of supply of coke dust for this
period by noticee No. 4.
he admitted that the original bills contained in file No. 32 withdrawn from
the premises of noticee Nos. 3 and 4 were sent by him for changing the
vehicle number and place of delivery; that the goods in respect of said
invoices were received by their weighbridge operator by mistake and
Cenvat credit was taken on the same day;
he agreed that he had taken Cenvat credit on such invoices in wrong
manner and added that due to practical adjustments in the industries, it
sometimes happens that the goods consigned to one party, were diverted
to other party’s premises and later on, the same were received by the first
party along with bill;
he stated that due to practical adjustments, it sometimes happen that the
goods are diverted; however, he did not have any proof to substantiate the
same;
On being shown the Panchnama and various statements recorded in
respect of diversion of pet coke through the truck intercepted by the officers
of Central Excise on 13.05.2008, he stated that all the said evidences do
not prove indulgence of noticee No. 1 in diversion of pet coke but did not
produce any proof to substantiate his negation in respect of various
panchnamas and statements of Shri Ajaybhai Pabari & Shri Bhavinbhai
Pabari of M/s. Radhe Vyapar Ltd., Shri Pravin Bhanderi of M/s. Pyramid
Cements, Shri Mohmad Rafik, owner of M/s. Om Sai Ram Transport
shown to him, statement of Shri Manojbhai, owner of M/s. Pratham
24 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 24 of 76
Transport, Jamnagar, the statement of Shri Shashikantbhai Koticha,
Managing Director of M/s. Jayshree Vyapar Ltd., Rajkot, however, he did
not have any proof to substantive his negation in this regard.
4. On 14.10.2008, Shri Rajan Vadaliya was arrested and produced
before the Chief Judicial Magistrate, Rajkot, who remanded him to judicial
custody. Thereafter, CJM, Rajkot granted him bail on 17.10.2008. The
Department preferred an appeal before the Hon. Sessions Court against the
said bail order of CJM, Rajkot. Hon. Sessions Court heard both the sides and
directed Shri Rajan Vadaliya to pay up the evaded duty amount or be ready for
cancellation of bail order passed by CJM, Rajkot. Shri Rajan Vadaliya
expressed willingness to pay up the evaded duty amount and tendered 4
cheques of Rs. 27 lakh each, totally amounting to Rs. 108 lakh to the
Department.
5. A separate show cause notice No. IV/03-31/D/2008-09 dated
21.10.2008 was issued to M/s. New Kishan proposing confiscation of 11.750
MTs (235 bags of 50 kgs each) of unaccounted stock of cement that was placed
under seizure on 26.04.2008 under rule 25 of Central Excise Rules,2002. The
notice also proposed separate penalty against M/s. New Kishan and Shri
Navneetbhai Vadalilya, Director of M/s. New Kishan under rule 25 of Central
Excise Rules,2002. The same is also taken up for adjudication through this
order.
6. Based on the various evidences gathered during the course of
investigation, the Department issued Show Cause Notice No. AE/D.II/AR-
Shapar/COMMR/55/2011 dated 29.03.2011 to M/s. New Kishan (noticee No.
1) and others summarizing the evidences & consequent allegations as under:
“25. Whereas, it appears that:-
I. The noticee No. 1 tried to deceive the central excise department by not
reflecting the actual purchase of coke dust/coke breeze in their Form-IV
register and showing the use of pet coke as input in a higher proportion in
order to unduly avail huge amount of Cenvat credit thereon. Inspite of
receiving a regular supply of coke dust from noticee No. 4, the receipts
were not shown in Form-IV register maintained by the said assessee.
Instead, they were showing only the purchase of pet coke on an average of
25 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 25 of 76
the quantity adjusting to the quantity of coke dust/coke breeze so
purchased. Such indulgence on the part of noticee No. 1, indicates a well
planned scheme for evading Central Excise duty.
II. The quantity of pet coke declared in the statutory records and the quantity
of coke dust/coke breeze shown to have been supplied by the noticee No.
4, if properly accounted for and used in the manufacturing process by the
noticee No. 1 would have resulted in excess production than accounted for,
which would have been cleared in clandestine manner.
III. The stock of pet coke shown to the search party was actually coke dust as
confirmed by the Manager Testing, NSIC, Rajkot and therefore, the receipts
of pet coke shown in RG-23-Pt.I as well as the corresponding Cenvat credit
availed in RG-23-Pt-II by noticee No. 1 were based on mere paper
transactions. The said indulgence gets reliance through the corroborative
evidences, recovered/noticed/found during the investigation from the
possession of various suppliers viz. noticee Nos. 3,7,8,9 and 10, the
transporters and their respective confessions that they had supplied only
the Cenvatable invoices without goods. Therefore, it appears that noticee
No. 1 was procuring only the cenvatable invoices of pet coke and availed
and utilized cenvat credit without using the same in the manufacturing
process.
IV. The mode of financial transactions between Noticee No. 1 with noticee Nos.
3 and 4, as admitted by noticee No. 5 in his statements supports and
establishes the above wherein he, acknowledged, inter alia, that they
were supplying only Cenvatable invoices of pet coke; that the payments
were received in cheques only; that he, after encashing the said cheques
was deducting his commission charges as well as the value of coke
dust/coke breeze supplied to the Noticee No. 1, returned the balance
amount to noticee No. 1 in cash. In addition, the depositon of Shri Bhavin
Pabari, proprietor of noticee No. 7 to the extent that he was to receive the
payments from the customers in cash in respect of 15 diverted trucks and
on receiving the same he would hand over the same to noticee No. 1,
further consolidated the indulgence mentioned above.
V. The attitude of noticee No. 1 in evading C. Ex. duty can be gauged from the
fact that even after booking of the case against them on 26.04.2008,
26 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 26 of 76
noticee No. 1, with the help of their another pet coke supplier, namely, the
noticee No. 7 was diverting the pet coke consigned to noticee No. 1 to the
premises of noticee No. 15 in a truck No. GJ-10-W-7484 intercepted by the
officers of Central Excise, Rajkot on 13.05.2008. The truck along with
loaded quantity of diverted pet coke was first detained and later on seized
vide Panchanama dtd. 15.05.2008. Subsequently, the same were
provisionally released on execution of Bond and Bank Guarantee. A Show
Cause Notice to this effect has been issued on 11.11.2008.
VI. The details recovered from the computer hard disc of noticees Nos. 3 and 4
indicated supply of coke dust/coke breeze to noticee No. 1 for the period
from Nov-2006 to January-08. The noticee No. 5 in his statement admitted
that they were supplying coke dust to noticee No. 1 prior to this period also
but had not kept the respective records for earlier period. It appears from
the records that there was an unexpected increase of purchase and use of
pet coke by noticee No. 1 during 2006-07 as compared to previous years.
Further, it appears from the records (dispatch books) seized from the
noticee No. 18 and confessional statements of their various suppliers,
transporters and ultimate users of such diverted pet coke that the noticee
No. 1 was also indulging in diverting the pet coke to other manufacturers
and acquiring only Cenvatable invoices during this earlier period also. The
suppression of the fact of not showing the receipts of coke dust/coke
breeze received from the noticee No. 4 in statutory records clearly shows
their intention to hide the diversion of pet coke right from the F. Y. 2006-07.
Moreover, the investigation in the matter has revealed that the records for
the earlier period were destroyed by some of the co-noticees as is evident
from their statements recorded during the course of investigation.
Nevertheless, indication and their corroborative evidences certainly
indicate that the noticee No. 1 was indulged in wrong availmnet and
utilization of Cenvat credit on a larger scale during 2006-07 & 2007-08
and 2008-09 (upto April-08).
26. Thus from the paras supra, it appears that
I. The noticee No. 1 (M/s. New Kishan) has contravened the provisions of
Rule 3 of Cenvat Credit Rules,2004 (hereinafter referred to as the
CCR,2004) inasmuch as the said noticee has availed Cenvat credits on pet
coke without actually receiving the same in their factory.
27 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 27 of 76
II. Rule 4 of CCR,2004 inasmuch as the Cenvat credits in respect of pet coke
were taken without receipt of the said goods in the factory.
III. Rule 9(5) of CCR,2004 inasmuch as noticee No. 1 failed to maintain proper
records for the receipt, disposal, consumption and stock of the inputs and
manipulated the said records so as to show the receipt of pet coke without
actually receiving them;
IV. It also appears that the noticee Nos. 3 (M/s. Hindustan Exports, Bharoodi),
8 (M/s. Jayshree Vyapar Ltd.) 9 (M/s. Karan Chemicals) and 10 (M/s.
Karan Marketing) are registered with Central Excise as registered dealers
and all of them connived with the said noticee No. 1 and others to abet the
noticee No. 1 in availing Cenvat Credit, which was not available to them
otherwise, and thus, concerned themselves in transporting, keeping and
selling of the excisable goods, which they knew or had reasons to believe,
were liable to confiscation and as such it appears that their registrations
are liable to be revoked and they have also rendered themselves liable to
penalty under rule 26 of the Central Excise Rules.
V. The noticee No. 4 (M/s. Kathiawad Indsutries, Bharoodi) and 7 (M/s.
Radhe Vyapar Ltd.) being not registered with Central Excise department,
yet connived with the said noticee No. 1 in the entire dealings and thus,
they have also rendered themselves liable for penalty under rule 26 of the
Central Excise Rules, 2002.
27. It also appears that the noticee Nos. 2 ( Shri Navneet Vadaliya, Director of
M/s. New Kishan), 5 (Shri Kuldipsinh Basiya, Partner of M/s. Hindustan
Exports & M/s. Kathiawad Industries, Bharoodi), 6 (Shri Rajan Vadaliya),
11 (M/s. Maruti Enterprise, Jamnagar), 12 (M/s. Samrat Cement,
Haramtala), 13 (Shri Ashok Vasani, partner of M/s. Samrat Cement,
Haramtala), 14 (Shri Bhavinbhai, Proprietor of M/s. Radhey Vyapar), 15
(M/s. Pyramid Portland Cement) 16 (M/s. Om Sai Ram Transport,
Jamnagar), 17 (Shri Pravin Bhanderi, Managing Director of M/s. Pyramid
Portland Cement), 18 (M/s. Partham Transport, Jamnagar), 19 (M/s.
Nilkanth Cement, Haramtala), 20 (M/s. Kailash Cement/Kaveri Cement)
21 (M/s. Tapi Cement), 22 (Shri Khodidas Sojitra, Director of M/s. Nilkanth
Cement), 23 (Shri Arvind Gangdas Sakhiya, Partner of M/s. Tapi Cement),
24 (Shri Dhiraj Rangani, partner of M/s. Kailash Cement/Kaveri Cement),
28 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 28 of 76
25 (Shri Sashikant Koticha, Director of M/s. Jayshree Vyapar), 26 (Shri
Gautam Patel, Partner of M/s. Karan Marketing) and 27 (Shri
Chandrakant Patel, partner of M/s. Karan Chemicals) connived with the
said noticee No. 1 and abetted them in availing Cenvat Credit which was
not available to them otherwise and concerned themselves in transporting,
keeping and selling of the excisable goods, which they knew or had
reasons to believe, were liable to confiscation and as such, they have also
rendered themselves liable to penalty under rule 26 of the Central Excise
Rules,2002.”
7. Accordingly, show cause notice No. AE/D.II/AR-
Shapar/COMMR/55/2011 dated 29.3.2011 under adjudication was issued to
the abovenamed noticees.
8. Defence submissions: 8.1 During the course of adjudication, noticees have advanced their
submissions, which are as under:
Noticee No.
Noticee Date of submission
1. M/s. New Kishan Cement Pvt. Ltd. 28.3.2013
2. Shri Navneet Vadaliya, Director of M/s. New Kishan
Cement Pvt. Ltd.
28.3.2013
3. M/s. Hindustan Exports (“HE”) 28.3.2013
4. M/s. Kathiawad Industries (“KI”) 28.3.2013
5. Shri Kuldipsinh Basiya, Partner of HE & KI 28.3.2013
6. Shri Rajan Vadaliya, Director of M/s. New Kishan
Cement Pvt. Ltd.
28.3.2013
7. M/s. Radhey Vyapar Ltd. 13.9.2012
8. M/s. Jayshree Vyapar Ltd. 15.3.2013
9. M/s. Karan Chemicals 28.3.2013
10. M/s. Karan Marketing 28.3.2013
11. M/s. Maruti Enterprise 5.9.2012
12. M/s. Samrat Cement 28.3.2013
13. Shri Ashok Vasani,
Partner of M/s. Samrat Cement
28.3.2013
14. Shri Bhavin Pabari, Proprietor of M/s. Radhey
Vyapar Ltd.
13.9.2012
29 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 29 of 76
15. M/s. Pyramid Portland Cement 13.9.2012
16. M/s. Om Sai Ram Transport Undated
17. Shri Pravin Bhandari, Managing Director of M/s.
Pyramid Portland Cement
13.9.2012
18. M/s. Pratham Transport 28.3.2013
19. M/s. Nilkanth Cement 13.9.2012
20. M/s. Kailash Cement Industries 19.5.2011 and 12.9.2012
21. M/s. Tapee Cement 19.5.2011 and 12.9.2012
22. Shri Khodidas Sojitra,
Director of M/s. Nilkant Cement
13.9.2012
23. Shri Arvind G. Sakhiya,
Partner of M/s. Tapee Cement
19.5.2011, 4.9.2012 & 26.2.2013
24. Shri Dhiraj Rangani,
Partner of M/s. Kailash Cement Industries
19.5.2011 & 12.9.2012
25. Shri Shashikant Koticha,
Director of M/s. Jayshree Vyapar Ltd.
15.3.2013
26. Shri Gautam Patel,
Partner of M/s. Karan Marketing
28.3.2013
27. Shri Chandrakant Patel
Partner of M/s. Karan Chemicals
28.3.2013
8.2 After receiving the notice, some of the noticees addressed several
letters for extension of time limit, etc. Some of them did not file reply until
personal hearing and filed the same thereafter.
8.3 The submissions made with reference to the contents of the notice,
are summarized as under:
(a) M/s. New Kishan, Shri Rajan Vadalia and Shri Navneet Vadalia (i.e.
Noticee Nos. 1,2 and 6):
They have submitted that M/s. New Kishan is engaged in manufacture of
cement & clinker; that main raw material used by them include pet coke; that
except pet coke, all other raw materials are non-excisable or exempted from
Central Excise duty; that it is on record that no incriminating
documents/records were found from the factory/office premises of M/s. New
30 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 30 of 76
Kishan; that the allegation regarding wrongful availment of Cenvat credit is
leveled on the basis of evidences/records seized from third party premises as
well as on the basis of ambiguous depositions made by the suppliers of pet
coke and transporters; that the material/evidence relied upon in the notice do
not support the entire quantum as proposed in the show cause notice. They
have further submitted that they had purchased a total quantity of 571.330 MT
of pet coke from M/s. Harsidhdhi Fertilizers & Chemicals and had availed total
Cenvat credit of Rs. 3,50,867/- on the same; that there is no evidence to allege
that entire quantity of pet coke purchased by them from M/s. Harsidhdhi
Fertilizers & Chemicals was not received by them; therefore, it is undisputed
that the pet coke purchased by them from M/s. Harsidhdhi Fertilizer &
Chemicals was actually received in their premises and credit was properly
taken on the same.
With regard to pet coke purchased by them from M/s. Radhey Vyapar, it
is submitted on the basis of statements of Shri Bhavin Pabari, Proprietor of
M/s. Radhey Vyapar that out of total purchase of 4633.058 MT, dispute is
limited to 144.470 MT of pet coke; that credit cannot be denied on the entire
quantity of pet coke purchased by them from M/s. Radhey Vyapar. With regard
to the disputed 144.470 MT (15 consignments) of pet coke, they have
submitted that the show cause notice does not clarify which specific invoices
were given to them without supply of pet coke; that unless it is specified in the
notice, it cannot be presumed that they had availed credit on the basis of any
such invoices; that they had not availed any Cenvat credit on the 4
consignments of pet coke intercepted by the Department and hence, the
question of denying the credit does not arise.
With regard to pet coke purchased by them from M/s. Jayshree Vyapar
Ltd., it is submitted that they had purchased a total quantity of 4068.929 MT
of pet coke from them and had availed Cenvat credit of Rs. 21,75,414/- on the
same; that Shri Satish Parekh, godown keeper of M/s. Jayshree Vyapar Ltd.
has not stated anything about diversion of pet coke meant for M/s. New
Kishan. By relying on the statements of Shri Sashikant Kotecha, Shri Satish
Parekh, both of M/s. Jayshree Vyapar & Shri Manoj Kanjibhai Virani of M/s.
Pratham Transport and daily dispatch register, it is submitted that they had
not issued any invoice in the name of M/s. New Kishan (but the same was
covered by invoices issued in the name of M/s. Major Cement). On this basis, it
is submitted that the entire quantity of 4068.929 MT of pet coke supplied by
31 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 31 of 76
M/s. Jayshree Vyapar was received by M/s. New Kishan and hence, the
allegation of wrongful denial of Cenvat credit is not sustainable.
With regard to pet coke purchased by them from M/s. Karan Chemicals,
it is submitted that they had purchased a total quantity of 5260.870 MT of pet
coke from them and had availed Cenvat credit of Rs. 29,60,742/- on the same;
that Shri Dipakbhai Sayani of M/s. Maruti Enterprise, Jamnagar, who had
stated in his statement-dated 27.5.2008 that he was not aware about the
delivery of goods at M/s. New Kishan, M/s. Major or any other places and
sometimes, goods delivered at places other than M/s. New Kishan or M/s.
Major Cement were endorsed with the seal of either M/s. New Kishan or M/s.
Major, has immediately retracted the statement under affidavit sworn before
notary (copy scanned on page 11 of the submission) and hence, his statement
is not left with any evidential value.
With regard to pet coke purchased by them from M/s. Karan Marketing,
it is submitted that they had purchased a total quantity of 5681.200 MT of pet
coke from them and had availed Cenvat credit of Rs. 41,46,412/- on the same;
that in view of retraction of his statement by Shri Dipakbhai Sayani of M/s.
Maruti Enterprise, Jamnagar, the allegation regarding diversion of pet coke
purchased by M/s. New Kishan from M/s. Karan Marketing is not sustainable
in the eyes of law.
With regard to pet coke purchased by them from M/s. Hindustan Export,
it is submitted that they had purchased a total quantity of 1748.390 MT of pet
coke from them and had availed Cenvat credit of Rs. 11,43,077/- on the same;
that consignments mentioned in the name of PP Enterprise were neither
received by them nor they had taken any credit on the same, which can be
verified from RG 23 A Part-I and Part-II maintained by them; that one
consignment of 17.260 pet coke shown as sold to M/s. Samrat Cement was
actually received by M/s. New Kishan and they had also taken credit for the
same in RG 23 A Part-II; that therefore, they had rightly taken credit on
1731.130 MT (1748.390-17.260 MT) of pet coke purchased from M/s.
Hindustan Exports.
They have further stated that Shri Kuldipsinh Basiya of M/s. Hindustan
Exports has retracted his statements by making affidavits dated 16.5.2008,
32 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 32 of 76
14.6.2008 and 11.11.2008 (copy enclosed) before notary and hence, his
statements cannot be relied.
On the above basis, they have submitted that out of the total Cenvat
credit of Rs. 1,36,00,292/-, the amount of Cenvat credit which can be disputed
and denied is Rs. 1,03,195/ only.
They have further submitted that the show cause notice merely relies
upon statements of co-noticees; that 2 main co-noticees have promptly
retracted their statements and copies of their affidavits are enclosed with their
submission for ready reference; that statements of Managing Director, Director,
Authorized Signatory, Supervisor and weighment in-charge of M/s. New Kishan
are ex-culpatory and not corroborated by the statements of raw material
suppliers; that statements of pet coke suppliers, transporters and other
customers do not prove anything positive; that all the allegations are based on
third party depositions or records seized from third party; that Hon. Supreme
Court in the case of Central Bureau of Investigation v/s V. C. Shukla & Ors,
1998 (75) ECR 484 has held in para 39 that even correct and authentic entries
in books of account cannot, without independent evidence of their
trustworthiness, fix a liability upon a person.
They have further submitted that except for M/s. Radhey Vyapar, no
other supplier of pet coke have conclusively deposed that they had diverted any
particular consignment (s) of pet coke; that some of the suppliers have given
their statements on mere hearsay by making references to transporters, truck
drivers, etc.; that some other suppliers have given vague statements; that
reliance placed by the Department on the statements of Shri Dipakbhai Sayani
of M/s. Maruti Enterprise (transporter), M/s. Manoj Virani of M/s. Pratham
Transport (transporter), entries made in the daily dispatch register of the said
transporter, etc. is misplaced inasmuch as the same is not corroborated. They
also placed reliance on the decision of Hon. Tribunal in the case of M/s. Raj
Sandeep Co., 2003 (162) ELT 1028 (T), wherein, it is held that suspicion
however strong, cannot be a substitute of proof.
They have further submitted that reliance placed by the Department on
computer print out is hit by the safeguard and conditions stipulated in section
36 B(2) of the Central Excise Act, 1944 and hence, the same cannot be
33 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 33 of 76
considered as admissible evidence. They cited the following decisions to
support this argument:
i) Jindal Nickel & Alloys Ltd., 2012 (279) ELT 134 (T)
ii) Hindustan Granites, 2010 (262) ELT 885 (T)
iii) Harsinghar Gutka Pvt. Ltd., 2008 (221) ELT 77 (T)
iv) Premium Packaging Pvt. Ltd., 2005 (184) ELT 165 (T)
v) Premier Instruments & Controls Ltd., 2005 (183) ELT 65 (T)
vi) International Computer Ribbon Corporation, 2004 (165) ELT 786 (T)
They have further submitted that the Department had found some
weighment slips and gate outward register of M/s. Hindustan Export and M/s.
Kathiawad Industries, Bharoodi showing consolidated dispatches of coke
dust/iron to the premises of M/s. New Kishan as well as M/s. Major Cement;
that it was explained by Shri Rajan Vadalia, Director of M/s. New Kishan in his
statements that they had received waste iron separated from coal; that the
same was non-usable waste for M/s. Hindustan Exports and M/s. Kathiawad
Industries, Bharoodi and hence, it was received free of cost; that Shri
Kuldipsinh Basiya has also stated in his statement that the main suppliers of
coal other than pet coke were M/s. Welspun Power & Steel Ltd., M/s. Nilkanth
Concast Pvt. Ltd., M/s. Mono Steel (India) Ltd., M/s. SAL Steel Ltd., M/s. New
Tech Foundry, M/s. Electrotherm (I) Ltd. etc.; that all these companies are
steel making companies; that while making sponge iron, waste coal containing
high iron content emerge as a by-product; that M/s. Hindustan Exports &
M/s. Kathiawad Industries separated waste iron particles from waste coal and
supplied the said waste iron to M/s. New Kishan in the name of coke dust; that
the said coke dust was not recorded in their books of accounts as the same
cannot be used as fuel in place of coal, coke or pet coke; that quantity of coke
dust alleged to have been procured by them in the notice (Annexure-B thereto)
was very high as compared to the 3 proforma invoice books resumed from the
premises of the aforesaid suppliers and they had not procured so much coke
dust as alleged.
They have further submitted that on 26.4.2008, Department had taken
samples from 1153.735 MT of pet coke lying in stock in their premises.
Thereafter, Department carried out weighment of the entire stock from
26.4.2008 to 1.5.2008. Owing to this, ground dust came to the top of the heap
of pet coke lying in stock. On 2.5.2008, Department again took samples from
34 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 34 of 76
the same stock of pet coke lying in their premises and got the same tested from
NSIC Technical Service Centre at Rajkot. They have contended that the method
adopted by the Department for drawing the sample was not in accordance with
method of sampling prescribed under BIS standard (copy submitted). They
have further contended that the laboratory from which Department got the
sample tested did not carry out test with reference to sulphur level and calorific
value; that hence, reliance placed by the Department on report-dated 5.5.2008
of NSIC stating that sample was not pet coke is misplaced. They also
submitted a specimen copy of test report issued by M/s. Reliance Industries
Ltd. regarding specifications of pet coke. They have also submitted that denial
of cross-examination of chemical examiner was unjustified and in violation of
the principles of natural justice. Their Director had refused to accept the test
report and stated that they did not agree with the method of testing. On this
basis, they requested for re-testing of the samples. They also submitted that
where there is a doubt regarding test report, it was important to get the goods
tested by an independent and outside laboratory. They have cited decisions of
Hon. Tribunal in the case of U. K. Paints Industries, 1994 (74) ELT 392 (T),
Taurion Steel Co. Pvt. Ltd., 2009 (241) ELT 390 (T) and Punjab Stainless Steel
Industries, 2000 (122) ELT 428 (T). They also relied upon e-mail supposedly
exchanged between M/s. Major Cement and M/s. Quality Services & Solution,
Gandhidham, wherein, the latter has opined that Ash, VM and FC is not
sufficient to decide the type of coal.
They have relied upon the following decisions in support of their plea for
cross-examination of the chemical examiner:
i) Kellogg India Ltd., 2006 (193) ELT 385 (Bom.)
ii) Hazoor Sahib Chemicals P. Ltd., 2008 (226) ELT 444 (T)
iii) Sandur Manganese & Iron Ores Ltd., 2007 (218) ELT 291 (T)
iv) State of Kerala v/s K. T. Shaduli Grocery Dealer, AIR 1977 SC 1627.
v) Kalra Glue Factory v/s Sales Tax Tribunal, 1987 (65) CTR (S.C.) 233.
vi) Sanjeev Woollen Mills, 2006 (158) ELT 477 (T)
vii) Jai Ganesh Textile and Woollen Pvt. Ltd., 2002 (149) ELT 352 (T).
They have further submitted that corrigendum-dated 14.2.2013 issued
by the Department is improper and bad in law inasmuch as it is clearly
mentioned at Sl. No. 23 & 24 to panchanama-dated 26.4.2008 that samples of
pet coke and cement were drawn from their premises.
35 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 35 of 76
They have further submitted that denial of cross-examination is in
violation of the principles of natural justice, as held in the following decisions:
i) Rama Shyama Papers Ltd., 2004 (168) ELT 494 (T)
ii) Himla Hosiety Mfg. Dye. & Printing Mills (P) Ltd., 2004 (164) ELT 274 (T).
iii) Lakshman Exports Limited, 2002 (143) ELT 21 (S.C.)
iv) Arya Abhushan Bhandar, 2002 (143) ELT 25 (S.C.)
v) Trinity Electric Syndicate Pvt. Ltd., 2005 (179) ELT 53 (T)
They have further submitted that grave charge of availment of CENVAT
credit without receiving the inputs cannot be made on the basis of
assumptions and presumptions; that the same is required to be proved with
cogent and tangible evidences; that charge of illicit clearance or availment of
CENVAT credit without receipt of the goods cannot be made merely on the
basis of alleged ambiguous confessional statements. They have relied upon the
following citations:
i) M/s. Ghodavat Pan Masala Products Ltd., 2004 (175) E.L.T. 182 (Tri. -
Mumbai)
ii) Shri Radheshyam Kanoria, 2006 (197) E.L.T. 130 (Tri. - Mumbai)
iii) M/s. Pioneer Industries, 2006 (193) ELT 506 (T)
iv) Shri Shiv Charan Bajpai, 2003 (160) ELT 1138 (T)
On the above basis, they have submitted that the demand of Cenvat
credit is not sustainable. Therefore, demand of interest is also not sustainable.
They have further submitted that they are not liable to penalty under
rule 15(2) of Cenvat Credit Rules,2004 readwith section 11AC of the Central
Excise Act, 1944. They have cited the decision of Hon. Supreme Court in the
case of Tamil Nadu Housing Board, 1994 (74) ELT 9 and Hindustan Steel Ltd.,
1978 (2) ELT J 159.
On the above basis, Shri Rajan Vadalia and Shri Navneet Vadalia,
Directors are also not liable to penalty.
With regard to show cause notice dated 21.10.2008, M/s. New Kishan
and Shri Navneetbhai Vadaliya, Director have filed a common submission
36 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 36 of 76
dated 25.10.2008. They have submitted that the officers had not carried out
physical verification of the stock and further, there is no evidence to proide tha
they intended to remove the goods clandestine.
(b) M/s. Hindustan Exports, M/s. Kathiyawad Industries and Shri Kuldipsinh Basiya, Partner (i.e. Noticee Nos. 3, 4 and 5):
They have submitted original affidavits dated 16.5.2008, 14.6.2008 and
11.11.2008 seeking to retract the statements of Shri Kuldipsinh Basiya. They
have further submitted that M/s. Hindustan Exports (“HE”) have supplied
1748.390 MT of pet coke to M/s. New Kishan; that M/s. HE has issued
invoices in favour of M/s. New Kishan and has passed on Cenvat credit; that
M/s. HE received the inputs under proper documents and sold the same under
valid documents; that during the course of investigation, it was categorically
stated that M/s. HE had received the payment from M/s. New Kishan through
cheque and the Department has not produced any evidence to prove that the
said amount was paid back to M/s. New Kishan; that the Department has not
produced any evidence to prove that M/s. New Kishan had not used the pet
coke received from M/s. HE for use in manufacture of their final product and
the said final product was not cleared on payment of duty.
They have further submitted that when the statements of Shri
Kuldipsinh Basiya were recorded, he was mentally sick and under mental
treatment at Rajkot and they had submitted copies of medical record and
certificate submitted to the Department under registered post dated
24.10.2008; that Shri Kuldipsinh Basiya has already retracted his earlier
statements and hence, the same have lost evidential value.
They have further submitted that as per deposition, M/s. HE issued
excisable invoices of pet coke in the name of M/s. New Kishan and M/s. Major
only; that however, it is evident from the invoices recovered from the premises
of M/s. HE under panchanama-dated 26.4.2008 that they supplied pet coke to
several other parties; that a close scrutiny of the entries at page Nos. 1 to 17
would reveal that consignments mentioned in the name of M/s. PP were
neither supplied to M/s. New Kishan nor invoices were issued in their favour;
that it would be seen from the entries made on these pages that in respect of
one entry, pet coke was shown as sold to M/s. Samrat Cement but the same
was supplied to M/s. New Kishan; that there is no other event on the basis of
37 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 37 of 76
which it can be presumed that M/s. HE issued invoices in favour of M/s. New
Kishan and sold the goods to other parties.
They have further submitted that “the department (has) heavily relied
upon the computer print out, after due editing therein, taken from the hard disk
seized from the premises of M/s. HE for alleging that in guise of the supplies
shown in said computer print-out, the invoices were pet coke given to M/s. New
Kishan without supply of pet coke…the hard disk from which the said printout
was taken was of the computer placed on the stock yard and used was not
consistently used for the period from Nov 2006 to April 2008. The proper
accounting and records were being maintained at the office situated at Star
Plaza, Rajkot. The computer at stock yard was maintained for entries for
reference and which were not authentic as the same were made by various
person at the same time period. The details stored in the said computer were not
the data which were recorded in regular process of information for the purpose of
activities shown therein. The computer was also not under lawful control of any
person of stock yard. There was no information which were regularly supplied to
the computer in the ordinary course of the said activities. It is also to submit that
the said computer was not operating properly. The accuracy of the contained
stored in the said computer is not reliable inasmuch as the same were entered
by various person also the same were in coding in nature. Since the contains are
showing supplies to single party mentioned as “KC” meaning of which can only
be given by the person who entered the said information, however, no version of
these person were recorded. There is also clear evidence on the computer
printout statement that the same were not drawn as such in the form it was
stored in the computer but the same was edited before printing, inasmuch as
heading of the data it is mentioned that, the source as hard disk, which was
typed by the excise officers themselves before taking computer printout. It is also
worth to appreciate that the contains of said computer printout was not certified
as correct by any of person”.
They have further submitted that Department had found some
weighment slips and gate outward register of M/s. Hindustan Exports and
M/s. Kathiawad Industries, Bharoodi showing consolidated dispatches of coke
dust/iron to the premises of M/s. New Kishan as well as M/s. Major Cement;
that “the item supplied by your noticee, viz. waste iron separated from coal and
the same was non-usable waste for M/s. Hindustan Export & M/s. Kathiawad
Ind. Bharudi and hence, supplied free of cost”; that this waste was not recorded
38 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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in their books of accounts as the same cannot be used as fuel; that quantity of
coke dust alleged to have been supplied by them in the notice (Annexure-B
thereto) was very high as compared to the 3 proforma invoice books resumed
from their premises and they had not supplied so much coke dust as alleged to
M/s. New Kishan; that therefore, the case of the Department that they had
supplied huge quantity of coke dust instead of pet coke and sale of pet was
only paper transaction is not substantiated.
They have further submitted that they are not liable to penalty under
rule 26 of Central Excise Rules,2002 and have cited the following decisions in
support of this plea:
i) Man Industries (India) Ltd., 2004 (175) E.L.T. 435 (Tri. - Del.)
ii) Steel Tubes of India Ltd., 2007 (217) ELT 506 (T)
They have further submitted that most of the period covered by the
notice is prior to 1.3.2007 and hence, no penalty is imposable on them under
rule 26. In support of this plea, they have cited the decision of Commissioner
(A) in the case of Kaluram Heda as well as Tribunal in the case of Ispat
Industries Ltd., 2008 (226) ELT 218 (Tri.-Mumbai). Decision in the case of M/s.
Dhanlaxmi Tube and Metal Industries, 2012 (282) E.L.T. 206 (Guj.) is also
cited.
They have further submitted that separate penalty on partnership firm
and partners cannot be imposed, as held by Hon. High Court of Gujarat in the
case of Mohammed Farookh Mohammed Ghani, 2010 (259) ELT 179 (Guj.).
They have finally submitted that proposal for withdrawal of registration
certificate is not proper and justified.
(c) Submissions by M/s. Radhe Vyapar Ltd., Rajkot and Shri Bhavin Pabari, Proprietor of M/s. Radhe Vyapar Ltd. (Noticee No. 7 & 14):
M/s. Radhe Vyapar Ltd., Rajkot and its proprietor Shri Bhavinbhai
Pabari have submitted that penalty under rule 26 of Central Excise Rules,
2002 can only be imposed when the person has a reason to believe that the
goods are liable to confiscation; that in the present case, they are engaged in
trading of goods not registered with Central excise and they did not pass
Cenvat credit to the excise manufacturers; that therefore, being a bona fide
39 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 39 of 76
supplier, they cannot be penalized for act of others; that it is nowhere alleged
in the show cause notice that they had a reason to believe that the goods are
liable to confiscation. On this basis, they have submitted that they are not
liable to penalty.
(d) M/s. Jayshree Vyapar Limited (Noticee No. 8), M/s. Om Sai Ram Transport (Noticee No. 16), Shri Shashikant Koticha (Noticee No. 25), Shri Gautam Patel (Noticee No. 26):
They requested to supply a copy of submission made by the main noticee
and submitted that they would file their submissions thereafter. They have not
filed any submission of their own rebutting the allegations leveled against them
in the notice.
(e) M/s. Karan Chemicals, Ahmedabad (Noticee No. 9), M/s. Karan Marketing (Noticee No. 10), Shri Chandrakant Patel, Partner of M/s. Karan Chemicals (Noticee No. 27) and Shri Gautam Patel, Partner of M/s. Karan Marketing (Noticee No. 26):
They have submitted that during the course of investigation, the main
noticee has categorically admitted the receipt of the material and payment
thereof to them through account payee cheque as well as payment to the
transporter; that the department has not produced any evidence to prove that
the said amount was paid back by them; that the department has not
produced the evidence that goods were returned to them by the main noticee or
the raw material received by the main noticee was not used in the manufacture
of final product.
They have further stated that Shri Dipakbhai Sayani of M/s. Maruti
Enterprise has already retracted his statement dated 27.5.2008 within 24
hours by making an affidavit before notary; that therefore, the deposition made
by Shri Dipakbhai Thakarshibhai Sayani of M/s. Maruti Enterprises,
Jamnagar has lost its evidential value and in light of this, there is nothing,
except hearsay, to show that M/s. New Kishan Cement Private Limited had
availed credit of duty without actual supply of the goods to them; that in
absence of any cogent evidence, no proceedings are sustainable against them.
40 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 40 of 76
They have further submitted that they are not liable to penalty under
rule 26 of Central Excise Rules,2002 and have cited the following decisions in
support of this plea:
i) Man Industries (India) Ltd., 2004 (175) E.L.T. 435 (Tri. - Del.)
ii) Steel Tubes of India Ltd., 2007 (217) ELT 506 (T)
They have further submitted that most of the period is prior to 1.3.2007
and hence, no penalty is imposable on them under rule 26. In support of this
plea, they have cited the decision of Commissioner (A) in the case of Kaluram
Heda as well as Tribunal in the case of Ispat Industries Ltd., 2008 (226) ELT
218 (Tri.-Mumbai). Decision in the case of M/s. Dhanlaxmi Tube and Metal
Industries, 2012 (282) E.L.T. 206 (Guj.) is also cited.
They have further submitted that separate penalty on partnership firm
and partners cannot be imposed, as held by Hon. High Court of Gujarat in the
case of Mohammed Farookh Mohammed Ghani, 2010 (259) ELT 179 (Guj.).
They have also submitted that proposal for withdrawal of registration
certificate is not proper and justified.
(f) M/s. Maruti Enterprise, Ahmedabad (Noticee No. 11):
Vide their letter dated 5.9.2012, they had requested for extension of time
limit for filing reply. Thereafter, they have not filed any reply rebutting the
allegations leveled against them.
(g) M/s. Samrat Cement (Noticee No. 12) and Shri Ashok Vasani (Noticee No. 13):
They have submitted that they “adopt the defence submission made by
supplier of coal/coke and main notice M/s. New Kishan Cement P. Ltd.”. They
have further submitted that there is no case where they had received pet coke
for which invoices were issued in favour of M/s. New Kishan; that the main
noticee has already clarified that the inputs under consideration was sold by
them to the main noticee and the main noticee has also accepted to have
received the material and having paid the price for the same; that the payment
due to them was also received by account payee cheque; that the Department
has not produced any evidence to prove that the amount paid by the main
41 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 41 of 76
noticee to them was returned back; that the Department has also not produced
any evidence to show that the raw material received by the main noticee was
not used by them in manufacture of final product.
They have further submitted that there is no mens reas and hence,
penalty cannot be imposed on them. They have relied upon the decision of Hon.
Tribunal in the case of Man Industries (India) Ltd., 2004 (175) ELT 435 (T).
They have also cited the decision of Hon. Tribunal in the case of Steel Tubes of
India Ltd., 2007 (217) ELT 506 (T) to contest penal action proposed against
them.
They have further submitted that Department has not quantified the
duty/credit involved on the pet coke supposedly dealt with by them; that
without quantification, penalty cannot be imposed on them under rule 26 of
the Central Excise Rules,2002.
They have further submitted that penalty is not imposable on them also
because Department has not recorded their statement.
They have further submitted that separate penalty on partnership firm
and partners cannot be imposed, as held by Hon. High Court of Gujarat in the
case of Mohammed Farookh Mohammed Ghani, 2010 (259) ELT 179 (Guj.).
They have also submitted that proposal for withdrawal of registration
certificate is not proper and justified.
(h) Submissions by M/s. Pyramid Portland Cement (Noticee No. 15), Shri Pravin Bhanderi, Managing Director of M/s. Pyramid Portland Cement (Noticee No. 17), M/s. Nilkanth Cement (Noticee No. 19) and Shri Khodidas Sojitra, Director of M/s. Nilkanth Cement (Noticee No. 22):
They have submitted that they are not liable for penalty under rule 26 of
Central Excise Rules, 2002 proposed against them considering that they bona
fide purchaser and there is no allegation in the notice that they had reason to
believe that the goods were liable to confiscation.
They have cited the decision of Hon. High Court of Karnataka in the case
of Five Star Shipping Co. Ltd., 2012 (278) ELT 196 (Kar.,) in their support.
42 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 42 of 76
(i) Submissions by M/s. Pratham Transport (Noticee No. 18):
They have submitted that there were 8 entries for 140.160 MT in the
daily dispatch register showing that goods meant for M/s. Major Cement
Private Limited were diverted to a place other than premises of M/s. Major
Cement. However, there is no entry in respect of M/s. New Kishan; that they
were not aware about any diversion of pet coke by M/s. Jayshree Vyapar
Limited; that sometimes, they gathered from truck drivers that particular
consignment was not delivered at the place mentioned in the challan but was
supplied elsewhere. They have further submitted that they have no
evidence/proof to this effect but they used to endorse daily dispatch register as
informed by the truck driver. They have further stated that they have never
verified the authenticity of the information of the truck driver and have received
the freight for the destination declared in the delivery challan.
They have further submitted that they are not liable to penalty under
rule 26 of Central Excise Rules,2002 and have cited the following decisions in
support of this plea:
i) Man Industries (India) Ltd., 2004 (175) E.L.T. 435 (Tri. - Del.)
ii) Steel Tubes of India Ltd., 2007 (217) ELT 506 (T)
They have further submitted that most of the period is prior to 1.3.2007
and hence, no penalty is imposable on them under rule 26. In support of this
plea, they have cited the decision of Commissioner (A) in the case of Kaluram
Heda as well as Tribunal in the case of Ispat Industries Ltd., 2008 (226) ELT
218 (Tri.-Mumbai). Decision in the case of M/s. Dhanlaxmi Tube and Metal
Industries, 2012 (282) E.L.T. 206 (Guj.) is also cited.
They have further submitted that separate penalty on partnership firm
and partners cannot be imposed, as held by Hon. High Court of Gujarat in the
case of Mohammed Farookh Mohammed Ghani, 2010 (259) ELT 179 (Guj.).
They have also submitted that proposal for withdrawal of registration
certificate is not proper and justified.
43 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 43 of 76
(j) Submissions by M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee Cement Industries (Noticee No. 21), Shri Arvind Sakhiya, Partner of M/s. Tapee Cement Industries (Noticee No. 23) and Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries (Noticee No. 24):
They have submitted that whatever pet coke was procured without bills
was procured from M/s. Jayshree Vyapar Ltd. and not from M/s. Radhey
Vyapar Ltd; that this fact is not disputed by the Department; that the said pet
coke was not meant for M/s. New Kishan or procured from M/s. New Kishan;
that therefore, pet coke procured by them without bill from M/s. Jayshree
Vyapar Ltd. had no connection with M/s. New Kishan; that “if it happened to be
the goods covered under such invoices might be managed by our supplied
without our knowledge and hence, merely be a coincidence.”
They have further submitted that burden of proof lies with the
Department to prove that the goods procured by them without bills were the
same goods covered by invoices issued in the name of M/s. New Kishan; that
no correlation is established between the goods received by them and the
invoices issued in the name of M/s. New Kishan; that penalty cannot be
imposed on mere speculation and assumption.
They have further submitted that there is nothing in their statements to
show that they were aware that the pet coke was liable to duty which was not
paid by the supplier; that they had purchased the pet coke from a dealer and
not a manufacturer; that there is no dispute over the fact that the
manufacturer (M/s. RIL) had discharged duty on the said goods; that rule 26(1)
is not application to alleged wrong availment of cenvat credit on the basis of
invoices issued by a registered dealer without delivering the goods; that they
had purchased the goods from M/s. Jayshree Vyapar Ltd. on principal-to-
principal basis and it had nothing to do with issuance or non-issuance of
invoices to any other manufacturer; that hence, they had neither any
knowledge regarding issuance of invoice by the said dealer to M/s. New Kishan
without delivery of goods nor it was their concern; that therefore, rule 26(2)(i) is
also not applicable to their case; that they had neither issued invoices on the
basis of which alleged benefit of Cenvat credit was availed by M/s. New Kishan
nor abetted in making the said invoices in any manner; that the goods in
question purchased by them, though without bills from M/s. Jayshree Vyapar
Ltd were in compliance with the orders placed by them directly; that the dealer
44 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 44 of 76
had never told them that the goods supplied to them were adjusted against
invoices issued in the name of M/s. New Kishan; that they were neither a
beneficiary of ineligible Cenvat credit nor involving in abetting the preparation
of such invoices and hence, they are not liable to penalty under rule 26(2) of
Central Excise Rules,2002; that Department has also not established that the
goods received by them were the same as those covered by the invoices issued
to M/s. New Kishan; that penalty cannot be imposed under rule 26(2) of
Central Excise Rules on mere speculation and assumption that goods
purchased by them are same as covered by the invoices issued in the name of
M/s. New Kishan.
They have also submitted that show cause notice also does not specify
the sub-rule of rule 26 of Central Excise Rules under which penalty is
proposed against them.
By citing statements of dealers, they have made the following
submission:
(i) Shri Kuldeep Singh Basiya, partner of M/s. Hindustan Exports and M/s.
Kathiyawad Industries were engaged in trading of pet coke to M/s. New
Kishan and M/s. Major Cement under cover of proforma invoices; that
such proforma invoices were converted into invoices at the time of
finalization done on monthly basis and payments thereof were received
by cheques; that rest of the proforma invoices were destroyed after
getting payment in cash; that he further stated that they issued
cenvatable invoices only in the name of M/s. New Kishan at their request
and the goods corresponding to such invoices were diverted to other
customers who did not require invoices; that thus, he has nowhere
mentioned that the balance quantity was supplied to them through M/s
New Kishan Cement or the customers procuring the goods without bills
were having knowledge about issuance of invoices to M/s. New Kishan
for the said quantities of goods; that in view thereof, provisions of rule 26
of the CER, 2002 for imposition of penalty upon them are not invocable
in this case.
(ii) None of the statements of Director of M/s. New Kishan indicates that the
quantity of goods specified in the impugned invoices was
supplied/diverted to them either in full or a part thereof.
45 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 45 of 76
(iii) Diversion of pet coke as alleged in the show cause notice was done only
at the end of suppliers and without their knowledge; that they always
placed orders for purchase of pet coke directly to their suppliers who
supplied the same to them; that however, it was not in their knowledge
that the same was adjusted against the cenvatable invoices that might
have been issued to M/s. New Kishan as alleged.
(iv) Even the goods intercepted in transit were found to be in the name of
M/s. New Kishan Cement and being diverted at the instructions of M/s.
Radhe Vyapar Limited to M/s. Pyramid Portland Cement, Hadamtala and
not to them.
(v) By relying the statement-dated 13.5.2008 of Shri Bhavinbhai Pabari,
they have submitted that dealers were diverting the goods without
informing the customers about the name of party to whom invoice was
issued.
(vi) Shri Manoj Kanjibhai Virani of M/s. Pratham Transport has clearly
stated that goods were diverted to them on the instructions of M/s.
Jayshree Vyapar Ltd. Hence, there was no connivance between them and
M/s. New Kishan.
(vii) Shri Satish Parekh, Manager-cum-godown in-charge of M/s. Jayshree
Vyapar Ltd. has stated that pet coke was supplied to M/s. New Kishan
through challans prepared in the name of individuals at the instructions
of Shri Shashikantbhai or Shri Kamleshbhai; that accordingly, pet coke
was delivered to them through challan and payment was made in cash;
that transaction was directly with the supplier and not with M/s. New
Kishan;
(viii) Shri Shashikantbhai has stated that M/s. Jayshree Vyapar Ltd.
facilitated their customers by providing pet coke without bills on cash
basis and such supply was adjusted by issuing retail as well as tax
invoice to the same customer; that they provided cenvatable invoices to
M/s. New Kishan and the consignments of pet coke were diverted to
other customers; that it is clear from his statement that diversion of
goods without bills was through mutual understanding of suppliers
(M/s. Jayshree Vyapar Ltd.) and customers like them; that there is no
46 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 46 of 76
nexus between customers and M/s. New Kishan for purchase of pet coke
from M/s. Jayshree Vyapar for adjustment of pet coke covered by
invoices issued in the name of M/s. New Kishan; that therefore, there is
no mens rea on their part and hence, they are not liable to penalty under
rule 26 of Central Excise Rules, 2002.
They have further submitted that there is no quantification of pet coke
allegedly diverted to them in the show cause notice and hence, penalty cannot
be imposed on them on the basis of vague show cause notice.
They have also cited the following decisions:
i) V. K. Vora, 2005 (187) ELT 264 (T)
ii) R. K. Steel, 2006 (206) ELT 1082 (T)
iii) Sangam Sales Corporation, 2011 (263) ELT 319 (T)
iv) Shri Manoj Kumar Pani, 2010 (260) ELT 92 (T)
The partners have additionally submitted that once penalty is not
imposable on partnership firm, being partners, they are also not liable to
penalty. They have also submitted that separate penalty on partners in
addition to penalty on partnership firm is not imposable. They have cited the
decision of Hon. High Court of Gujarat in the case of Mahendra Kumar
Kapadia, 2010 (260) ELT 51 (Guj.) in this regard.
(k) Further submissions by M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee Cement Industries (Noticee No. 21), Shri Arvind Sakhiya, Partner of M/s. Tapee Cement Industries (Noticee No. 23) and Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries (Noticee No. 24):
They have submitted that the show cause notice does not specify the
quantity of pet coke alleged to have been purchased by them which was
rendered liable to confiscation or this was merely a case of abetment; that the
show cause notice does not specify the sub-rule of rule 26 under which penalty
is proposed; that provisions of rule 26(2) were inserted vide notification No.
8/2007-CE (NT) dated 1.3.2007 and does not apply retrospectively; that the
show cause notice does not specify the quantity of pet coke purchased by them
prior to 1.3.2007; that allegations have been levelled against them only on the
basis of confessional statements of various persons including their partner
which are not corroborated by any documentary evidence; that penalty under
47 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 47 of 76
rule 26 can be imposed only if presence of mens rea is established. They have
cited the following decisions:
i) VVF Limited, 2011 (267) ELT 134 (T)
ii) Ashish Gupta, 2007 (214) ELT 339 (T)
iii) Daya Shankar Tiwari, 2007 (09) LCX 248
iv) Adhunik Alloys Ltd., 2010 (254) ELT 221 (P&H)
v) Mukand Ltd.
They have further submitted that Department has not any produced any
evidence to establish connivance between them and anyone else to enable M/s.
New Kishan to avail Cenvat credit without receiving any goods or abetting the
dealers in issuing fake invoices to M/s. New Kishan without supplying any
goods; that therefore, they are not liable for penalty under rule 26 of Central
Excise Rules, 2002. They have cited the following decisions:
i) B. C. Sharma, 2000 (122) ELT 158 (T)
ii) Harish Dye and Printing Works, 2001 (138) ELT 772 (T)
iii) Manish Richariya & Ors, 2003 (89) ECC 394
iv) Moontex Dyeing and Printing, 2007 (119) ECC 185
(l) Shri Arvindbhai G. Sakhiya (Noticee No. 23):
Shri Shailesh G. Sakhiya, Partner of M/s. Tapee Cement under letters
dated 4.9.2012 and 26.2.2013 informed that Shri Arvindbhai G. Sakhiya
passed away on 1.8.2012 and submitted death certificate No. 144207 dated
8.8.2012 issued by Rajkot Municipal Corporation.
9. Cross-examination & Personal hearing:
9.1 Personal hearing was fixed on 5.9.2012. Shri Paresh Sheth,
Advocate and Shri Rajan Vadaliya, Director of M/s. New Kishan attended the
hearing on 5.9.2012 and requested to provide copy of test report of samples
drawn on 26.4.2008 referred in paragraph 3 on page of the show cause notice.
They also submitted that if these samples were not tested, the same may be
tested and they may be provided a copy of the same. Further, under their letter
dated 11.9.2012, M/s. New Kishan requested for cross-examination of a large
number of persons, namely, panchas who were present in the factory premises
48 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 48 of 76
on 26.4.2008, 2.5.2008 & 3.5.2008; Shri Haresh Kalaria (Chief Chemist),
panch witnesses at M/s. Hindustan Exports/Kathiawad Industries, Shri
Kuldipsinh Basiya, Chemical Examiner of NSIC, Shri Ajay Pabari, Shri Shabir
Sheikh, Shri Bhavin Pabari, Shri Pravin Bhandari, Shri Md. Rafik Gulam
Hussein, Shr Dipak Sayani, Shri Vallabhbhai Javia, Shri Ramesh Advani, Shri
Manoj Virani, Shri Dhiran Rangani, Shri Arvind Gangdas, Shri Khodidas
Sojitra, Shri Satish Parekh, Shri Shashikant Kotecha, Shri Ashok Vasani, Shri
Chandrakant Patel and Shri Gautam Patel. The request was not acceded to
after considering the facts of the case.
9.2 On 5.9.2012, appearing on behalf of M/s. New Kishan and Shri
Rajan Vadaliya, Director of M/s. New Kishan, Shri Paresh Sheth, Advocate
requested to provide copy of test report of samples drawn on 26.4.2008 referred
in paragraph 3 on page of the show cause notice. They also submitted that if
these samples were not tested, the same may be tested and they may be
provided a copy of the same.
9.3 On verification of panchanama-dated 26.4.2008 drawn at the
factory premises of M/s. New Kishan, it was observed that there is no narration
regarding drawl of any samples. In absence of any narration in the
panchanama regarding drawl of any samples & sealing the same in the
presence of independent panchas, it became clear that no samples were drawn
from their premises. Consequently, on 14.2.2013, a suitable corrigendum to
the show cause notice was issued and the noticees were given opportunity of
personal hearing on 26.2.2013. In response to this, Shri Paresh Sheth,
Advocate under letter dated 25.2.2013 reiterated the request for cross-
examination of the chemical examiner.
9.4 Under letter dated 26.2.2013, the noticee was informed that they
were already informed under earlier letter dated 15.2.2013 that their request
for cross-examination was not acceded to and they were granted personal
hearing on 4.3.2013. On 4.3.2013, Shri Paresh Sheth, Advocate appeared on
behalf of M/s. New Kishan and requested/reiterated the request for cross-
examination of atleast Chemical Examiner. The request was not acceded to in
the facts of the case and vide letter dated 6.3.2013, M/s. New Kishan and all
other noticees were given opportunity of personal hearing on 15.3.2013.
Considering the request made by Advocate of M/s. New Kishan to adjourn the
hearing fixed on 15.3.2013, hearing was held on 19.3.2013. Shri Paresh Sheth,
49 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 49 of 76
Advocate appeared for hearing on 19.3.2013 and requested for 10 days time for
filing submissions.
9.5 On 13.9.2012, Shri Pragnesh Hirpara, Advocate appeared on
behalf of noticee Nos. 7, 14, 15, 17, 19 and 22 and reiterated the submissions
already made by them. Under his further letter dated 21.2.2013, he informed
that they have already attended hearing on 13.9.2012 and are not desirous of
any further hearing.
9.6 M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee
Cement Industries (Noticee No. 21) and Shri Dhiraj Rangani (Noticee No. 24)
under their respective letters received on 26.2.2013 have requested to decide
the case on the basis of their written submissions.
9.7 The remaining noticees did not avail the opportunity of personal
hearing.
10. Discussion and Findings:
10.1 I have carefully gone through the facts of the case as well as the
submissions advanced by the noticees.
10.2 The basic issue involved in this case is proposed denial of Cenvat
credit totally amounting to Rs. 1,36,00,295/- taken by the main noticee M/s.
New Kishan on pet coke on the ground that they had taken this credit on mere
invoices issued by several dealers without actually receiving the said
cenvatable item, claimed as input used by them in manufacture of clinker &
cement. I find that the officers of Central Excise visited their factory on
26.4.2008 and found that they had recorded a stock of 1153.735 MT of pet
coke in their Cenvat input account register, i.e. RG 23 Pt.-I register and nil
quantity of non-cenvatable inputs like coke dust, coke breeze, etc. in their raw
material account register, i.e. Form-IV register. The officers carried out
weighment of the goods claimed as pet coke and noticed shortage of
approximately 20 MT. On 2.5.2008, the officers took representative samples
from the stock of goods claimed as pet coke and sent the same to NSIC
Technical Services Centre- Rajkot (A Government of India Enterprise) for
testing. The report given by the NSIC Technical Services Centre under their
letter No. NSIC/TSC/CSC/CL/08-09 dated 7.5.2008 revealed that the sample
was coke dust and not pet coke. Thus, according to the test report given by the
50 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 50 of 76
NSIC Testing Services Centre, the goods comprising the stock lying in the
premises of M/s. New Kishan were coke dust, a non-cenvatable item and not
that of pet coke, on which M/s. New Kishan had taken Cenvat credit.
10.3 M/s. New Kishan have contended that the Department ought to
have tested the sample drawn on 26.4.2008 and should have provided them
with a copy of the test report in this regard. However, on going through the
panchanama drawn at the premises of M/s. New Kishan on 26.4.2008, it is
observed that the same does not contain any narration regarding drawl of
samples of pet coke. There is a mention of 3 packets of samples of pet coke and
3 packets of samples of cement at Sl. No. 23 & 24 respectively of the annexure
to the said panchanama but in the absence of any narration in the
panchanama that samples were being drawn and separately packed in 3
packets, it cannot be said that any samples were drawn on 26.4.2008. The only
inference that can be drawn from the entries at Sl. No. 23 & 24 of the annexure
is that 3 packets of pet coke and 3 packets of cement were taken into custody
from their premises by the officers. Further, the statement-dated 14.10.2008 of
Shri Rajan Vadaliya, Director of M/s. New Kishan also refers to samples drawn
on 2.5.2008 and there is no reference to any samples drawn on 26.4.2008.
There is a difference between formally drawing of samples of any goods for
testing and mere taking into custody of ready-to-carry packets of such goods.
In the absence of any narration regarding actual drawl of samples in the
panchanama, the contention of M/s. New Kishan that samples were drawn on
26.4.2008 is not supported by the facts on record.
10.4 I also find that M/s. New Kishan have argued that Department has
relied upon test report of samples that were not drawn in accordance with the
method prescribed under BIS standards. They have further contended that
these samples were not tested in a proper manner. They have submitted copy
of “specifications of Petcoke” printed on the letterhead of Reliance Industries
and a test report dated 31.3.2012 on the letterhead of Quality Services &
Solutions (QSS). They have sought cross-examination of the chemist of NSIC
Technical Services Centre, Rajkot who tested their samples. In this regard, I
find from the statement dated 14.10.2008 of Shri Rajan Vadaliya, Director of
M/s. New Kishan that replying to Q.10, he has agreed with the sampling
procedure followed on 2.5.2008 and has not requested for re-drawal of samples
etc. for any reason in his statement that was recorded after over 5 months. I
also find that M/s. New Kishan have admitted in paragraph 6.4.2 of their
51 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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written submission that NSIC Technical Services Centre tested the samples
with reference to ash content, volatile matter and fixed carbon. A comparison
between the specifications of pet coke circulated by M/s. Reliance Industries
Limited (a copy of which has been circulated by the noticee during the present
proceedings) and the findings of NSIC Technical Services Centre reveals the
following:
Sl. Parameter Specification of petcoke as per RIL
Test report of NSIC Technical Service Centre
1. Ash content 1, max 58.40
2. Volatile Matter 8, min 13.80
3. Fixed Carbon 87, min 27.80
10.5 It is clear from the above comparison that report given by NSIC
Technical Service Centre to the effect that sample is not pet coke cannot be
faulted even by applying the specifications placed on record by noticees
themselves. The sample has failed in two of the three specifications tested by
the Department by a wide margin. The e-mail exchanged between M/s. Major
Cement (and not M/s. New Kishan) and M/s. Quality Services & Solutions
(QSS) referred in paragraph 6.4.7.1 of their written submission cannot come to
their rescue owing to the fact that they have deliberately not disclosed the
material fact regarding the low percentage of fixed carbon reported by NSIC
Technical Services Centre to QSS. They have made request for re-testing and
cross-examination of chemical examiner. However, while making the request
for re-testing and cross-examination, they have not pinpointed any specific
discrepancy or error in conducting the tests carried out by the NSIC Technical
Services Centre with reference to the three parameters tested by them.
Consequently, they have failed to build a case for re-testing and cross-
examination.
10.6 I further find that findings of the NSIC Technical Service Centre based on which the Department has alleged that the goods lying stock in the premises of M/s. New Kishan were not cenvatable pet coke but non-cenvatable coke dust, is not a matter of coincidence. It is a matter
of record that documentary evidence in the form of cash memo book Nos. 1,2
and 3 recovered from the premises of M/s. Kathiawad Industries revealed that
during April,2008, the said supplier had supplied 1630.304 MT of coke dust to
52 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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M/s. New Kishan, date-wise details of this are given in Annexure-B to the show
cause notice. This fact is duly confirmed by Shri Kuldipsinh Basiya, partner of
M/s. Kathiawad Industries in his statement-dated 26.4.2008 recorded under
section 14 of Central Excise Act, 1944, which was never retracted (unlike
affidavits filed with intent to retract statements dated 15.5.2008 and
13.6.2008, which are separately discussed in this order). In fact, Shri
Kuldipsinh has gone on record stating that he supplied cenvatable invoices of
pet coke that were issued by his partnership firm M/s. Hindustan Exports to
M/s. New Kishan, without actually supplying any pet coke and received a
consideration of Rs. 75/- per tonne from M/s. New Kishan. Therefore, there is
no merit in the request for cross-examination of chemist and re-test of the
samples made by M/s. New Kishan.
10.7 I also find that the entire dispute is about Cenvat credit availed by
M/s. New Kishan on goods claimed to be duty paid pet coke. M/s. New Kishan
is a registered manufacturer of clinker & cement and there is no reason to
believe that they were or are not aware of the provisions of rule 9(5) of Cenvat
Credit Rules,2004. According to this, the burden of proof regarding the
admissibility of the CENVAT credit is upon the manufacturer or provider of
output service taking such credit. The Department has placed overwhelming
evidence on record to show that 1153.737 MT raw material lying in the
premises of M/s. New Kishan was coke dust and not pet coke. Therefore, M/s.
New Kishan were required under the law to conclusively establish that the said
goods were pet coke and not coke dust. There can be no denying the fact that
the goods, at all times, were in their custody. Therefore, they were required to
take every possible step to demonstrate at all times that goods on which they
had taken Cenvat credit were pet coke. They have not made any attempt to do
so. They have not only failed on this count but they have also failed to place on
record documentary evidence to show that they had received each and every
consignment of pet coke on which they had taken Cenvat credit under a test
report issued by accredited laboratory.
10.8 Therefore, test report of NSIC Technical Service Centre coupled
with documentary evidence in the form of cash memo book Nos. 1,2 and 3
recovered from the premises of M/s. Kathiawad Industries, supplier of coke
dust and statements of Shri Kuldipsinh Basiya, partner of the said supplier
goes to establish that 1153.737 MT of goods found lying in the premises of
M/s. New Kishan on 26.4.2008 that were accounted for in their statutory
53 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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register as pet coke was actually coke dust, a non-cenvatable item. Therefore,
it is held that M/s. New Kishan had wrongly availed Cenvat credit on 1153.735
MT of coke dust and accordingly, the demand of irregularly availed Cenvat
credit on the said coke dust is required to be upheld.
10.9 I shall now deal with the allegation leveled against M/s. New
Kishan that they had also availed Cenvat credit on the basis of cenvatable
invoices issued by M/s. Hindustan Exports, M/s. Radhey Vyapar Ltd., M/s.
Jayshree Vyapar Ltd., M/s. Karan Chemicals and M/s. Karan Marketing
without actually receiving pet coke covered by such invoices.
10.10 M/s. New Kishan have stated in paragraph 5.1 of their written
submission dated 28.3.2013 that the notice does not support denial of entire
Cenvat credit, in paragraph 5.4.4 ibid that 144.470 MT of pet coke purchased
from M/s. Radhey Vyapar Ltd. is disputed, in paragraph 5.8.10 that they had
taken Cenvat credit on 17.260 pet coke that was actually consigned to M/s.
Samrat Cement, in paragraph 5.10 that amount of Cenvat credit which can be
disputed and denied is Rs. 1,03,195/-, etc. Through these averments, M/s.
New Kishan have already conceded that they have taken Cenvat credit on pet
coke in a wrongful manner. They have mainly relied upon a scanned copy of
affidavit supposedly bearing signatures of Shri Dipakbhai Thakarsheebhai
Sayani dated 28.5.2008, photocopy of affidavits dated 16.5.2008, 14.6.2008
and 11.11.2008 signed by Shri Kuldipsinh Bhikhubha Basiya to the effect that
they are retracting their respective statements. They also made request for
cross-examination of each and every person named in the notice but eventually
pressed for cross-examination of the chemical examiner. They have also raised
objection against reliance placed by the Department on the computer print out
taken from the hard disc of computer recovered by the officers from the
common premises of M/s. Hindustan Exports and M/s. Kathiawad Exports.
They have relied upon a large number of judicial pronouncements in support of
their plea for cross-examination. I have carefully gone through these case laws
and I find that none of them deal with the issue involved in the present case,
i.e. admissibility of Cenvat credit which is governed by Cenvat Credit
Rules,2004. These Rules cast the burden of proof regarding the admissibility of
the CENVAT credit on the manufacturer and as already held earlier, M/s. New
Kishan have failed to submit any documentary evidence showing that they
always received pet coke accompanied by a test certificate from a accredited
laboratory.
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10.11 In the case of M/s. Jagdish Shanker Trivedi v/s CC, Kanpur, 2006
(194) ELT 290 (Tri.-Del.), Hon. Tribunal while relying on various judgments of
Hon. Supreme Court has held as under:
“7.1 The question as to whether there was any contravention of natural
justice by the customs authorities when the persons whose statements
were recorded were not produced to enable their cross-examination, came
up for consideration by the Supreme Court in Kanungo's case (supra) in the
context of the provisions of confiscation made under Section 167(8) of the
Sea Customs Act read with Section 3(2) of Imports and Exports (Control)
Act, 1947 and the Supreme Court in paragraph 12 of the judgment rejected
that contention in the following terms:
“12. We may first deal with the question of breach of natural justice. On
the material on record, in our opinion, there has been no such breach. In
the show cause notice issued on August 21, 1961, all the material on
which the Customs Authorities have relied was set out and it was then for
the appellant to give a suitable explanation. The complaint of the appellant
now is that all the persons from whom enquiries were alleged to have been
made by the authorities should have been produced to enable it to cross-
examine them. In our opinion, the principles of natural justice do not
require that in matters like this the persons who have given information
should be examined in the presence of the appellant or should be allowed
to be cross-examined by them on the statements made before the Customs
Authorities. Accordingly we hold that there is no force in the third
contention of the appellant.”
The decision in Kanungo & Co. was followed by the Calcutta High Court in
Tapan Kumar Biswas v. Union of India (supra) in paragraph 17 of the
judgment and it was held that in a proceeding under the Customs Act the
proceedees are not entitled to cross-examine the witnesses. The decision in
Ashutosh Ghosh and Another v. Union of India and Others reported in
1977 Criminal Law Journal N.O.C. 67, was also relied upon and it was
observed in paragraph 20 of the judgment that the Supreme Court in
Ashutosh Ghosh’s case has categorically held that a proceedee is not
entitled to cross-examine the witnesses. The decision of the Division Bench
of the Calcutta High Court in Kishan Lal case (supra) was also referred in
paragraph 18 of the judgment and it was held to be laying down the
proposition that cross-examination of the witnesses (in the matter under
55 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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the Sea Customs Act) was not comprehended. Referring to all these
decisions, the Court held, that a proceedee was not entitled to cross-
examination of any witnesses under Section 124 of the said Act which
lays down the extent of applicability of the principles of natural justice and
under which a proceedee was not entitled to cross-examine any witnesses
(para 11). Thus in view of the decisions of the Hon’ble Supreme Court in
Kanungo & Co., Ashutosh Ghosh and of the Calcutta High Court, in the
above two decisions, it is abundantly clear that a noticee cannot claim a
right to cross-examine under Section 124 of the said Act.”
10.12 Hon. Tribunal in the case of Fortune Impex v/s CC, Calcutta, 2001
(138) ELT 556 (Tri.-Kolkata) [affirmed in 2004 (164) ELT 4 (S.C.) & 2004 (167)
ELT A 134 (S.C.)] has held as under:
“…The learned Advocate has also emphasised that non-allowing of cross-
examination of 26 persons sought by him also vitiates the proceedings.
The cross-examination of the witness, wherever necessary, has to be
allowed in Departmental Proceedings. But it is not required that in each
and every case cross-examination should necessarily be allowed. There is
no absolute right of cross-examination provided in the Customs Act. This
was the view held by the Calcutta High Court in the case of Tapan Kumar
Biswas v. UOI, 1996 (63) ECR 546. Cross-examination of witnesses cannot
be demanded as of right. The presumption is that unless the noticee
makes out a case for cross-examination he will not be granted cross-
examination. The Appellate Tribunal in the case of Debu Saha v. Collector
of Customs, 1990 (48) E.L.T. 302 (T) held that “It is no doubt true that in all
cases, cross-examination need not be granted, but it all depends on the
circumstances of each case.” The Tribunal also observed in that case that
if the Collector comes to the conclusion that the cross-examination is not
material then by assigning reasons, he can reject the prayer…”
10.13 During investigation, evidence in the form of data contained in the
hard disc of a computer shared by M/s. Hindustan Exports and M/s.
Kathiawad Industries revealed that during the period from November,2006 to
January,2008, M/s. Kathiawad Industries, a supplier of non-cenvatable items,
who operated from the premises of M/s. Hindustan Exports and was looked
after by Shri Kuldipsinh Basiya, partner of both M/s. Hindustan Exports and
M/s. Katiawad Industries had supplied a total quantity of 22102.39 MT of coke
56 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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dust to M/s. New Kishan and their sister concern, namely, M/s. Major Cement.
However, M/s. New Kishan had shown receipt of only 1563.805 MT of coke
dust in their Form-IV registers.
10.14 Shri Kuldipsinh Basiya, partner of M/s. Hindustan Exports & M/s.
Kathiawad Industries, both operating from a common business premise, has
stated the following facts in his statements dated 26.4.2008, 15.5.2008 and
13.6.2008 recorded under section 14 of Central Excise Act, 1944:
M/s. Hindustan Exports was registered as 2nd stage dealer who
raised invoices on M/s. New Kishan for supply of pet coke. They
purchased pet coke from M/s. Radhey Vyapar Ltd. (Noticee No. 7),
who was a 1st stage dealer of pet coke manufactured by M/s. RIL;
Pet coke received from M/s. Radhey Vyapar was unloaded by them
without any weighment and without entering the same in any
register;
They settled the accounts with M/s. New Kishan on monthly basis
and destroyed the proforma invoices without preparing any invoice;
After perusing the details of Annexure-I to file No. 48 recovered
from their premises, he admitted that they supplied 1500 to 2000
MT of coke dust/coke breeze to M/s. New Kishan and M/s. Major
Cement;
Original invoices contained in file No. 32 found in their premises
were sent back by Shri Rajan Vadaliya, Director of M/s. New
Kishan (Noticee No. 6) for changing the vehicle numbers;
He was acting on the request of Shri Rajan Vadaliya (Noticee No. 6)
that they required only cenvatable invoices of pet coke and hence,
he diverted the pet coke to other customers and issued cenvatable
invoices of pet coke in the name of M/s, New Kishan by changing
the vehicle number, etc.
57 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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Customers outside the state did not require cenvatable invoices of
pet coke and hence, he diverted the goods to such customers and
issued the invoices in the name of M/s. New Kishan;
He received the payment from M/s. New Kishan through cheque,
which he encashed and returned the cash amount back to them
after deducting his commission @ Rs. 75/- PMT.
They supplied coke dust/fine to M/s. New Kishan (and M/s. Major
Cement) using code name “K.C” (Kishan Cement);
They dealt with Shri Rajan Vadaliya, Director of M/s. New Kishan
only;
They diverted pet coke covered by invoices issued in the name of
M/s. New Kishan at the instructions of Shri Rajan Vadaliya,
Director of M/s. New Kishan.
P.P. Enterprise was a code word used by them for showing the
diversion of pet coke to parties outside the state whereas excisable
invoices were prepared in the name of M/s. New Kishan.
10.14 The above facts are corroborated by the statement of Shri Bipin
Patel, weighbridge in-charge of M/s. New Kishan, who, in his statement
recorded under section 14 of Central Excise Act, 1944 has stated that majority
of trucks received from M/s. Hindustan Exports and M/s. Kathiawad
Industries were loaded with coke dust; that on an average, 3-4 trucks loaded
with coke dust were received by M/s. New Kishan from M/s. Kathiawad
Industries every day.
10.15 This goes on to establish that M/s. New Kishan were receiving a
huge quantity of coke dust on day-to-day basis. However, when the officers
visited their factory on 26.4.2008, it was found that they had shown ‘nil’ stock
of coke dust & other non-cenvatable raw material and had instead shown a
stock of 1153.735 MT of cenvatable pet coke, which, on testing was found to be
coke dust, a non-cenvatable item.
58 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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10.16 The record further reveal that on 13.5.2008, officers intercepted
one truck bearing No. GJ 10 W 7484 coming out of the godown of M/s. Radhey
Vyapar Ltd., Rajkot. The driver of the truck revealed that the truck was
carrying pet coke loaded from M/s. RIL and was being transported to the
premises of M/s. Pyramid Portland Cement, Hadamtala on the instructions of
Shri Bhavinbhai Pabari, Proprietor of M/s. Radhey Vyapar Ltd. On further
inquiry, it was found that the truck was loaded with 16.54 MT of pet coke
covered by LR No. 1564 dated 12.5.2008 & invoice No. 1065742 issued by M/s.
RIL showing the name of buyer as M/s. Radhey Vyapar Ltd. and consignee as
M/s. New Kishan. In his statement recorded under section 14 of Central
Excise Act, 1944, Shri Shabbir Hussain Sheikh, truck driver revealed that he
was given a kutcha chit by Shri Ajay Pabari, depot in-charge of M/s. Radhey
Vyapar Ltd. bearing the name and address of M/s. Pyramid Portland Cement.
He further stated that he transported pet coke to M/s. Radhey Vyapar Ltd. 15
to 18 every month and delivered pet coke in the above said manner to M/s.
Pyramid Portland Cement since last 3 months. In his statement recorded under
section 14 of Central Excise Act, 1944, Shri Ajay Pabari has admitted the facts
stated by Shri Shabbir, truck driver. I find that Shri Bhavinbhai Pabari,
Proprietor of M/s. Radhey Vyapar Ltd. has stated the following facts in his
statements dated 13.5.2008 recorded under section 14 of Central Excise Act,
1944:
As they were not registered with Central Excise Department, they
facilitated passing of Cenvat credit by requesting M/s. RIL to
prepare invoice showing M/s. Radhey Vyapar Ltd. as buyer and
the name of excisable unit to whom Cenvat credit was intended to
be passed, as consignee;
They supplied Central Excise invoices to M/s. New Kishan and
corresponding goods were diverted to M/s. Pyramid Portland
Cement and others;
The last 15 trucks, as per details mentioned at page No. 73 of the
red colour diary recovered from them, were diverted to M/s.
Pyramid Portland Cement and they had sent the corresponding
invoices to M/s. New Kishan and M/s. Major Cement; that M/s.
New Kishan and M/s. Major would make the payment through
cheque and after receiving the payment from M/s. Pyramid
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Portland Cement in cash, they would hand over the cash to M/s.
New Kishan and M/s. Major.
They had given invoices for 144.470 MT of pet coke to M/s. New
Kishan for a consideration of Rs. 80/- PMT.
Pet coke covered by lorry receipt Nos. 1563/12.5.2008 for invoice
No. 1065625 and 1564/12.5.2008 for invoice No. 1065742 meant
for M/s. New Kishan was diverted to M/s. Pyramid Portland
Cement under cover of kutcha chits.
Three more trucks loaded with diverted pet coke had reached the
premises of M/s. Pyramid Portland Cement but they refused to
take delivery as they had learnt about interception of truck No. GJ
10 W 7484; that if the said truck had not been intercepted, they
would have delivered the entire quantity of pet coke at the
premises of M/s. Pyramid Portland Cement and supplied
cenvatable invoices to M/s. New Kishan and M/s. Major Cement.
10.17 The above facts are corroborated by the statement of Shri Pravin
Bhanderi, Managing Director of M/s. Pyramid Portland Cement recorded under
section 14 of Central Excise Act, 1944.
10.18 Shri Sashikant Koticha, Director of M/s. Jayshree Vyapar Ltd., a
registered dealer of M/s. RIL has also admitted in his statement dated
18.9.2008 recorded under section 14 of Central Excise Act, 1944 that they
facilitated their customers by providing pet coke without bill and collected
payment in cash; that the cenvatable invoices were issued in the name of M/s.
New Kishan while the corresponding pet coke consignments were diverted to
mini cement plants in Rajkot during 2006-07. Shri Manoj Virani, proprietor of
M/s. Pratham Transport, Jamnagar who looked after transportation of pet coke
purchased by M/s. Jayshree Vyapar Ltd. from M/s. RIL has also admitted in
his statement dated 19.6.2008 that the truck drivers had informed him from
time to tome that pet coke sent to M/s. New Kishan was delivered at other
places.
10.19 Shri Dipak Sayani, commission agent of M/s. Maruti Enterprise,
who was engaged in transportation of pet coke on behalf of M/s. Karan
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Chemicals (Noticee No. 9) and M/s. Karan Marketing (Noticee No. 10) has also
admitted in his statement-dated 27.5.2008 recorded under section 14 of
Central Excise Act, 1944 that truck drivers informed him that they were
unloading pet coke meant for M/s. New Kishan at other places on the
instructions of responsible persons of M/s. New Kishan for which M/s. New
Kishan paid extra transportation cost directly to the drivers. He further stated
that he destroyed the record pertaining to earlier period on the instructions of
the owners of M/s. Karan Chemicals and M/s. Karan Marketing. In their
respective statements recorded under section 14 of Central Excise Act, 1944,
Shri Gautam Patel, partner of M/s. Karan Marketing and Shri Chandrakant
Patel, partner of M/s. Karan Chemicals, a registered dealer with Central Excise
Department, have admitted that authorized persons of M/s. New Kishan
directed the truck drivers to deliver the goods at desired places; that he cannot
confirm that pet coke dispatched in the name of M/s. New Kishan was
delivered to them only; that they had issued invoices in the name of M/s. New
Kishan as per instructions received and he did not know whether pet coke was
delivered to M/s. New Kishan.
10.20 Thus, all the above 5 dealers of pet coke have admitted and stated
that they had merely issued Cenvatable invoices of pet coke in the name of
M/s. New Kishan to facilitate them to take Cenvat credit while pet coke was
diverted for use by other parties. They have also admitted that they earned
commission on per tonne basis for providing cenvatable invoices to M/s. New
Kishan.
10.21 The actual buyers of pet coke have also accepted that they
purchased pet coke without invoices and made cash payment to the
dealers/suppliers.
10.22 Considering that the goods lying in stock were not found to be pet
coke on being subjected to chemical analysis by a laboratory run by
Government of India Enterprise and the dealers have also admitted that they
diverted pet coke and they merely provided cenvatable invoices to M/s. New
Kishan, the plea of cross-examination is rejected.
10.23 The affidavits, scanned and photocopies of which have been
submitted alongwith written submission were never filed before any
Departmental officer by the concerned persons. Therefore, they are discarded. I
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also rely upon the decision of Hon. Tribunal in the case of Tara Chand Shival,
2003 (158) E.L.T. 699 (Tri. - Del.), wherein, it has been held that when original
affidavits retracting from the confessional statement were neither submitted to
the Commissioner nor there is any evidence on record to indicate that any such
affidavit was received by the Commissioner, confessional statement is reliable.
10.24 M/s. New Kishan have further argued that computer printout
containing details of 22,102.39 MT of coke dust to M/s. New Kishan and their
sister concern M/s. Major Cement that was taken from the hard disc of
computer recovered from the common premises of M/s. Hindustan Exports and
M/s. Kathiawad Industries is not considered to be admissible evidence. They
have cited various case laws in support of this argument. M/s. Hindustan
Exports, M/s. Kathiawad Industries and Shri Kuldipsinh Basiya, partner,
through a common submission have also challenged the evidential value of the
date taken from computer on the ground that computer was not used
regularly, etc. However, I find from the record that the computer hard disc was
opened in the presence of Shri Kuldipsinh Basiya, partner and independent
witnesses on 4.6.2008 while Shri Kuldipsinh Basiya had already admitted in
his statement recorded under section 14 of Central Excise Act, 1944 on
15.5.2008, i.e. prior to opening of the hard disc that they were supplying 1500-
2000 MT of coke dust to M/s. New Kishan and their sister concern M/s. Major
Cement every month under the code name “K.C.” for Kishan Cement. The table
prepared on page 8 of the show cause notice on the basis of data contained in
the computer hard disc that was opened subsequent to the admission of Shri
Kuldipsinh Basiya is only a corroboration of the facts already admitted by him.
The submissions advanced by M/s. Hindustan Exports, M/s. Kathiawad
Industries and Shri Kuldipsinh Basiya questioning the authenticity of data
found from their computer is nothing but afterthought considering the facts
admitted by Shri Kuldipsinh Basiya in his statements recorded under section
14 of Central Excise Act, 1944. It is a basic and settled law that what is
admitted need not be proved, as held by Hon. Supreme Court in the case of
Systems & Components Pvt. Ltd., 2004 (165) ELT 136 (S.C.).
10.25 I also find that Hon. Tribunal in the case of Copier Force India
Ltd., 2008 ((231) E.L.T. 224 (Tri. - Chennai) has held as under:
“Revenue has argued that once the printout is taken in presence of
responsible persons who dealt with the data entry in the CPU and
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retrieval, printouts of such data do not need to comply with the
safeguards enlisted u/s 36B(2) of the Act. While this is a reasonable
stand, we find that the data retrieved are proved by the bank
statements and oral evidence of employees of CFI. Thus the
computer printouts are not solely relied on as evidence and the non-
fulfilment of conditions under 36B(2) alleged does not affect the
printouts being used in proceedings.
…
The Computer printouts are amply corroborated by the bank statements.
Therefore the provisions of Section 36B cannot be invoked to make its
application in the proceedings impermissible. The printout is not a
standalone evidence; they become evidence only when juxtaposed
alongside the bank statements. Section 36B does not bar such use of a
printout in proceedings which does not satisfy the requirements of its Sub-
section 2(d).”
For the above reasons, the argument is rejected.
10.26 I also find that Shri Kuldipsinh Basiya has submitted affidavit
dated 16.5.2008 stating that contents of his statement dated 15.5.2008 are not
voluntary; affidavit dated 14.6.2008 stating that contents of his statement
dated 13.6.2008 are not voluntary and affidavit dated 11.11.2008 stating that
his earlier statements do not clarify the actual facts of the case. He has also
submitted that he was mentally sick during the period when his statements
were recorded and he had submitted the certificate of doctor under registered
post to the Department. In this regard, I find that the noticee has taken 2
diametrically opposite stands to escape from the consequences of his
statements recoded under section 14 of Central Excise Act, 1944 inasmuch as
the affidavits were not only never submitted to the Department at any point in
time and have been produced for the first time on 28.3.2013, i.e. after expiry of
about 5 years of recording his statement but the affidavits also make no
mention about the supposed mental sickness. The certificates dated
20.10.2008 and 23.10.2008 of doctor are full of ambiguous expressions like
“likely to be suffering”, “as per history given by relatives” etc. and in any case,
the statements which find mention in the show cause notice were recorded on
26.4.2008, 15.5.2008 and 13.6.2008, about 4 months earlier to his supposed
interaction with the doctor and no representation was ever made to the
Department advancing medical grounds at the time of recording the
63 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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statements. While the noticee has claimed that they had submitted the doctor’s
certificate through registered post on 24.10.2008, no such claim is made in
regard to the affidavits, making it amply clear that no valid ground was ever
existed for retracting the statements. Accordingly, the plea is rejected.
10.27 I also find that Shri Rajan Vadaliya, Director of M/s. New Kishan
chose to adopt denial mode throughout the investigation. However, this tactic
is of no help considering the overwhelming evidence discussed in the preceding
paragraphs.
10.28 I shall now deal with the case laws cited by M/s. New Kishan to
argue that the charge of wrongful availment of Cenvat credit without receiving
the inputs cannot be made based on assumptions and presumptions. In the
relied upon decision in the case of Ghodavat Pan Masala Products Ltd., 2004
(175) ELT 182 (T), Hon. Tribunal has held that when the department has based
his case on the statement of certain parties and when the statements were
retracted in writing by them, it was imperative on the department to have
brought corroborative evidence to substantiate the allegation of clandestine
removal. The department having not done so, has lost their right to raise the
demand merely on presumption/assumption. In the case of Radheshyam
Kanoria, 2006 (197) ELT 130 (T), Hon. Tribunal has held that the allegations of
clandestine removal, which are quasi criminal in nature are required to be
proved by the revenue by production of sufficient tangible evidence on record.
In the case of Pioneer Industries, 2006 (193) ELT 506 (T), Hon. Tribunal has
held hat demand alleging clandestine removal cannot be made merely on the
basis of confessional statements when the assessee had produced documentary
evidence to show that the goods were not misdeclared. In the case of Shri Shiv
Charan Bajpai, 2003 (160) ELT 1138 (T), Hon. Tribunal has held that
confession should not be made the sole ground to prove guilt. In this regard, I
find that the facts involved in all the relied upon decisions are distinguishable
inasmuch as none of them dealt with provisions of Cenvat Credit Rules,2004
where the burden to prove the admissibility of credit is cast upon the
manufacturer and not on the Department. In the case of Commissioner of
Central Excise, Chandigarh v/s Spark Steel Sales, 2010 (256) ELT 134 (T),
Hon. Tribunal has held as under:
“6.5 The eligibility for taking of credit by the manufacturers on the
basis of documents issued by the dealers is necessarily dependent
upon the eligibility of the dealers to pass on the credit. If the goods
64 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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are not proved to have been delivered by the dealers to the
manufacturers, the invoices issued by the dealers could not be
treated as valid documents for passing on the credit. In other words,
if it was held that the dealers were not eligible to pass on the credit,
in view of serious defects in the documents, the question of
manufacturers taking credit based on such ineligible documents will
not arise. The burden to prove that the documents under which
credit taken are valid documents is shifted to the manufacturers
after major discrepancies have been brought out by the
Department.”
In this case, M/s. New Kishan have not placed on record any
documentary evidence to establish that consignments of goods accounted for
by them as pet coke were invariably received under certificates/test reports
issued by accredited laboratories at the material time certifying the goods to be
pet coke. Further, the sample tested by the Department through a Government
of India undertaking run laboratory established that goods accounted for as pet
coke were not pet coke. The dealers have admitted that they diverted the pet
coke meant for M/s. New Kishan at the instance of the Shri Rajan Vadaliya for
monetary consideration and provided them with cenvatable invoices for taking
Cenvat credit in a wrongful manner. The supplier of coke dust (accounted for
by M/s. New Kishan as pet coke) has accepted the fact that they supplied coke
dust on a regular basis to M/s. New Kishan. The weighbridge in-charge of M/s.
New Kishan has gone on record stating that most of the trucks unloaded at the
factory premises of M/s. New Kishan brought coke dust. The actual buyers of
pet coke have also accepted that they purchased pet coke without invoices and
made cash payment to the dealers/suppliers. A common thread running across
all these evidences is that M/s. New Kishan had entered into an arrangement
with commonly controlled M/s. Hindustan Exports (dealer of pet coke) and
M/s. Kathiawad Industries (supplier of coke dust and other non-cenvatable
items) to actually supply coke dust but issue invoices of pet coke to enable
them to take wrongful credit on such invoices without receiving pet coke in
their factory premises. Thus, the decisions cited by M/s. New Kishan are of no
avail. For the above reasons, their further plea that they had acted in a bona
fide manner & hence, they are not liable to penalty and their reliance on the
decisions of Hon. Supreme Court in the case of Tamil Nadu Housing Board,
1994 (74) ELT 9 (S.C.) and Hindustan Steel Ltd., 1978 (2) ELT J 159 is also
misplaced. The above evidences clearly prove that their act of taking Cenvat
65 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
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credit in a wrongful manner was pursuant to a modus operandi perpetrated by
them with intent to evade payment of duty and not an act of inadvertence and
hence, mandatory penalty is rightly proposed agaisnt them. I draw support
from the decision of Hon. Supreme Court in the case of M/s. Rajasthan
Spinning & Weaving Mills, 2009 (238) E.L.T. 3 (S.C.)
10.29 The evidences discussed in the preceding paragraphs clearly
establish that over and above the Cenvat credit taken on the stock of coke dust
found lying in their factory on 26.4.2008, the remaining Cenvat credit covered
by the notice was also taken by M/s. New Kishan in a wrongful manner,
without actually receiving the said input in their factory premises. They had
perpetrated the fraudulent availment of Cenvat credit in a deliberate manner
with intent to cause loss to the revenue and hence, the proposal to recover the
entire Cenvat credit by invoking extended period in terms of rule 14 of Central
Excise Rules,2004 readwith proviso to section 11A(1) of Central Excise Act,
1944 is required to be upheld. As a corollary, demand of interest under section
11AB of Central Excise Act, 1944 on the amount of Cenvat credit wrongly
taken is also upheld. Consequently, I also hold that M/s. Kishan are liable to
mandatory penalty proposed against them under rule 15 (2) of Central Excise
Rules,2004 readwith section 11AC of Central Excise Act, 1944.
11.1 I shall now deal with the proposals directed against the remaining
noticees. It is proposed against M/s. Hindustan Exports (Noticee No. 3), M/s.
Jayshree Vyapar Ltd. (Noticee No. 8), M/s. Karan Chemicals (Noticee No. 9) and
M/s. Karan Marketing (Noticee No. 10) to revoke the registration granted to
them under rule 9 of Central Excise Rules and impose penalty against them
under rule 26 of Central Excise Rules. I have already discussed in the
preceding paragraphs that the abovenamed dealers issued cenvatable invoices
of pet coke in favour of M/s. New Kishan in order to facilitate them to take
Cenvat credit while the input covered by such invoices was diverted to other
customers. Two of them have categorically admitted that they provided the
invoices to M/s. New Kishan for monetary consideration paid to them on per
tonne basis. They have cited the decisions in Steel Tubes of India Ltd. – 2007
(217) ELT 506 (T-LB) and order No. 259/2009 (Ahd-III) passed by
Commissioner (A) to oppose penalty. However, I rely upon the decision of Hon.
Tribunal in the case of M/s. Nashik Strips Pvt. Ltd., 2010 (256) ELT 307 (T) to
hold that all the abovenamed dealers who are responsible for providing invoices
to M/s. New Kishan for taking Cenvat credit without supplying the pet coke to
66 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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them are liable to penalty under rule 26 of Central Excise Rules,2002. I also
rely upon the decision of Hon. Tribunal in the case of Commissioner of Central
Excise, Ahmedabad v/s Navneet Agarwal, 2012 (276) ELT 515 (Tri.-Ahmd.),
wherein, it has been held that penalty under rule 26 of Central Excise
Rules,2002 is imposable even before introduction of rule 26(2), which provided
for penalty where invoices were issued without delivery of goods. Accordingly, I
hold the abovenamed dealers as well as Shri Kuldipsinh Basiya (Noticee No. 5)
who is partner of M/s. Hindustan Exports, Shri Shashikant Koticha (Noticee
No. 25) who is Director of M/s. Jayshree Vyapar Ltd., Shri Gautam Patel
(Noticee No. 26) which is partner of M/s. Karan Marketing and Shri
Chandrakant Patel (Noticee No. 27) who is partner of M/s. Karan Chemicals, as
liable to penalty under rule 26 of Central Excise Rules,2004 for the entire
period covered by the notice. For the purpose of quantifying the penalty, the
particulars like quantity of pet coke for which these dealers provided invoices
to M/s. New Kishan and the amount of Cenvat credit taken by M/s. New
Kishan on the said invoices is as under:
Sl. Name of the dealer Total quantity of Pet coke covered by invoices issued in the name of M/s. New Kishan*
Total Cenvat credit taken by M/s. New Kishan#
1. M/s. Hindustan Exports 1748.390 MT Rs. 11,43,077.00 2. M/s. Jayshree Vyapar
Ltd. 4068.929 MT Rs. 21,75,414.00
3. M/s. Karan Chemicals 5260.870 MT Rs. 29,60,742.00 4. M/s. Karan Marketing 6031.103 MT** Rs. 41,46,412.00 * As per details contained in respective submissions filed by dealers. ** 5681.670 as per M/s. New Kishan. # As per details contained in the submission filed by M/s. New Kishan.
11.2 I also find that the abovenamed dealers have acted willfully in
providing invoices to M/s. New Kishan for taking Cenvat credit on one hand
and on the other hand, they diverted the input to other buyers. They have
systematically abetted M/s. New Kishan in wrongful availment of Cenvat credit
and breached the law for several years and therefore, they deserve exemplary
punishment. Accordingly, I hold that Central Excise registration granted to
each of them under rule 9 of Central Excise Rules,2004 is liable to be revoked.
11.3 With regard to penalty proposed against the remaining noticees, I
find that Shri Navneet Vadaliya (Noticee No. 2) and Shri Rajan Vadaliya
67 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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(Noticee No. 6) are Directors of M/s. New Kishan and have played active role in
orchestrating the modus operandi under which M/s. New Kishan received only
cenvatable invoices from dealers for taking credit in a wrongful manner and the
dealers sold the pet coke covered by such invoices to several buyers who
consciously bought this excisable item without invoices. Therefore, I rely upon
the following decisions to hold that both of them are individually liable for
penalty under rule 26 of Central Excise Rules,2002:
i) M/s. Nashik Strips Pvt. Ltd., 2010 (256) ELT 307 (T)
ii) Mahesh Kadakia, 2007 (217) ELT 223 (T)
11.4 With regard to M/s. Kathiawad Industries (Noticee No. 4), I find
that Shri Kuldipsinh Basiya is a common partner of M/s. Hindustan Exports
and M/s. Kathiawad Industries. He entered into an arrangement with M/s.
New Kishan, according to which, the former issued cenvatable invoices in the
name of M/s. New Kishan showing sale of pet coke that was actually diverted
to other buyers and never supplied to M/s. New Kishan while the latter
supplied coke dust in large quantities to enable M/s. New Kishan to
camouflage the non-receipt of pet coke covered by the invoices issued by M/s.
Hindustan Exports. Thus, in supplying coke dust in place of pet coke, thereby,
substituting the pet coke covered by invoices issued by M/s. Hindustan
Exports meant for M/s. New Kishan, with coke dust, they had rendered the pet
coke covered by the invoices issued by M/s. Hindustan Exports liable to
confiscation under section 25 of Central Excise Rules,2004 and hence, the
abovenamed noticee is liable to penalty under rule 26 of Central Excise Rules.
11.5 M/s. Radhey Vyapar Ltd. & Shri Bhavin Pabari (Noticee No. 7 & 14
respectively) knowingly engaged themselves in selling and supplying pet coke to
the buyers other than M/s. New Kishan (for whom it was actually meant &
whose name was also mentioned in the excisable invoices issued by the
manufacturer). Thus, by selling & supplying the excisable goods to persons
other than the consignee already named in the invoice issued by the
manufacturer, they also rendered pet coke liable to confiscation under section
25 of Central Excise Rules,2004 and rendered themselves liable to penalty
under rule 26 of Central Excise Rules,2004. With regard to M/s. Samrat
Cement & their partner Shri Ashok Dhirubhai Vasani (Noticee No. 12 & 13
respectively), M/s. Pyramid Portland Cement & their Managing Director Shri
Pravin Bhanderi (Noticee No. 15 & 17 respectively), M/s. Nilkanth Cement &
68 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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their Director Shri Khodidas Sojitra (Noticee 19 & 22 respectively), M/s.
Kailash Cement Industries & their partner Shri Dhiraj Rangani (Noticee No. 20
& 24) and M/s. Tapee Cement Industries & their partner Shri Arvind G.
Sakhiya (Noticee No. 21 & 23 respectively), I find that all these noticees are also
engaged in manufacturing excisable goods, namely, cement and bought
cenvatable input, namely, pet coke from the abovenamed dealers without bill
despite the fact that the pet coke was actually covered by invoices prepared in
the name of M/s. New Kishan. Their respective partners/Directors were
instrumental in the procurement process. One of the Directors, namely, Shri
Khodidas Sojitra has admitted that they purchased the pet coke without bill
because it was cheaper when compared with pet coke offered with bill. None of
them have shown that they were inexperienced persons ignorant about the
Central Excise law and procedures regarding clearance of excisable goods.
Therefore, there is no reason to believe that they were not aware about the fact
that excisable goods which were offered to them without invoice and at a
cheaper rate was on account of compromise with duty component that was
being fraudulently availed by M/s. New Kishan as Cenvat credit on the
strength of invoices that should have been actually issued in their respective
names, considering that eventually, it was they who were the actual recipient of
the goods. I have carefully gone through the case laws cited by them but the
same are not applicable to the present case which rest on a different footing
and is covered by ratio of the decision of Hon. Tribunal in the case of M/s. Om
Sivam Textiles v/s Commissioner of Central Excise, Salem, 2006 (201) ELT 572
(Tri.-Chennai), which is reproduced below:
“7. I have carefully considered the facts of the case and the
submissions of the ld. SDR. It is not disputed that the appellants
had received excisable goods without cover of proper invoice. The
document under cover of which goods had been consigned to the
appellants had been taken back by the supplier. The goods removed
without payment of duty by a manufacturer or registered person of a
wareshouse or a registered dealer are liable for confiscation in terms
of sub-rule 1 of Rule 25 of the Central Excise Rules, 2001. Therefore,
the confiscation of the goods is proper. As the goods had been seized
from the appellants they were allowed to redeem the goods on
payment of a fine. As per Rule 26 of the Central Excise Rules, 2001,
any person who acquires possession of, or is in any way concerned
in transporting, removing, depositing, keeping, concealing, selling or
69 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
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purchasing, or in any other manner deals with, any excisable goods
which he knows or has reason to believe are liable to confiscation
under the Act or these rules, shall be liable to a penalty not
exceeding the duty on such goods or rupees ten thousand,
whichever is greater. The lower appellate authority found that Shri
M. Paramasivam, as an experienced trader, should have known that
cotton yarn should not have been received without invoice and
concurred with the lower authority that the appellant had abetted
the clandestine removal by M/s. Kumaran Textiles. Therefore, the
imposition of penalty of Rs. 10,000/- on the appellants is also in
accordance with law. In view of my above findings, I do not find any
infirmity with the impugned order passed by the Commissioner
(Appeals). Accordingly I dismiss the appeal.”
11.6 In view of the above, I hold the abovenamed noticees are liable to
penalty under section 26 of Central Excise Rules,2004. However, it is seen from
the record in the form of notarized copy of death certificate No. 144207 dated
8.8.2012 isued by Rajkot Municipal Corporation submitted by Shri Shailesh G.
Sakhiya under his letter dated 4.9.2012 that Shri Arvind G. Sakhiya (Noticee
No. 23) passed away on 1.8.2012. Therefore, by following the decision of Hon.
High Court of Himachal Pradesh in the case of Pamwi Tissues Ltd., 2010 (252)
ELT 38 (H.P.), I do not impose any penalty on late Shri Arvind G. Sakhiya.
11.7 The ratio of the decision in the case of M/s. Om Sivam Textiles
supra would also apply to M/s. Maruti Enterprise (Noticee No. 11), M/s. Om
Sai Ram Transport (Noticee No. 16) and M/s. Pratham Transport (Noticee No.
18) inasmuch as Shri Dipak Sayani, commission agent of M/s. Maruti
Enterprise, Shri Mohmad Rafik Gulamhussein, Proprietor of M/s. Om Sai Ram
Transport and Shri Manoj Kanjibhai Virani, Proprietor of M/s. Pratham
Transport have all admitted in their respective statements recorded under
section 14 of Central Excise Act, 1944 that they had knowingly transported the
cenvatable pet coke lawfully consigned to M/s. New Kishan to the other
consignees by taking instructions of dealers. Thus, they also abetted the
offence perpetrated by M/s. New Kishan in connivance with the dealers and
hence, I hold them liable to penalty under rule 26 of Central Excise
Rules,2004.
70 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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11.8 It is also argued that separate penalty cannot be imposed on
partner once partnership firm is penalized. However, the argument fails in the
light of the decision of Hon. Tribunal in the case of Central Excise, Daman v/s
Commissioner of Mohd. Amin A. S. Lakha, 2012 (275) E.L.T. 465 (Tri. - Ahmd.)
upholding separate penalty on partner by relying on the decision of Hon.
Supreme Court in the case of Prakash Metal Works, 2007 (216) ELT 660 (S.C.).
The decision of Hon. Supreme Court upholding separate penalty on partner
and partnership firm was also relied/followed in the following decisions:
(i) Ranjikant Ratilal Kadiwala - 2009 (245) ELT 379 (T)
(ii) Ashirwad Synthetics - 2009 (245) ELT 444 (T)
(iii) Textoplast Industries - 2011 (272) ELT 513 (Bom)
12. With regard to show cause notice No. IV/03-31/D/2008-09 dated
21.10.2008, I find that during the course of search of the premises of M/s. New
Kishan on 26.4.2008, the officers found that they had failed to account for
11.750 MT (235 bags of 50 kgs each) of Ordinary Portland Cement valued at
Rs. 55,225/- in their Daily Stock Account. Consequently, I hold these goods
liable for confiscation under rule 25 of Central Excise Rules,2002 and hold
M/s. New Kishan liable to penalty under the said rule. I also find that Shri
Navneetbhai Vadalia, Director of M/s. New Kishan has admitted in his
statement-dated 27.4.2008 that he looked after the day to day activities of the
factory and hence, I hold him liable to penalty under rule 26 of Central Excise
Rules,2002. I rely upon the following decisions to support my decision in this
regard:
(i) Bharat Rolling Mills, 2012 (284) ELT 539 (T)
(ii) Ambica Poly Tubes, 2010 (262) ELT 447 (T)
13. In view of the above discussion and findings, I pass the following order:
Order
(I) Show Cause Notice No. AR/D.II/AR-Shapar/COMMR/55/2011 dated 29.3.2011:
(A-I) I deny Cenvat credit amounting to Rs. 1,36,00,295/- (Rupees One Crore
Thirty Six Lakh and Two Hundred Ninety Five only) taken by M/s. New
Kishan Cement Pvt. Ltd., Shapar (Veraval), Shitla Mata Mandir Road,
71 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
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Shapar, Dist. Rajkot and order for its recovery under rule 14 of Cenvat
Credit Rules, 2004 readwith proviso to section 11A(1) {now, section
11(4)} of Central Excise Act, 1944 from them.
(A-II) I order for recovery of interest at the appropriate rate on the amount of
Cenvat credit confirmed at (A-I) above, from M/s. New Kishan Cement
Pvt. Ltd., Shapar (Veraval), Shitla Mata Mandir Road, Shapar, Dist.
Rajkot under rule 14 of Cenvat Credit Rules,2004 readwith section 11AA
(earlier 11AB) of the Central Excise Act, 1944.
(A-III) I impose penalty of 1,36,00,295/- (Rupees One Crore Thirty Six Lakh
and Two Hundred Ninety Five only) on M/s. New Kishan Cement Pvt.
Ltd., Shapar (Veraval), Shitla Mata Mandir Road, Shapar, Dist. Rajkot
under rule 15 (2) of Cenvat Credit Rules, 2004. However, in terms of
proviso to section 11 AC of the Central Excise Act, 1944, if the Cenvat
credit as determined above and the interest payable thereon under
section 11AA (earlier 11AB) is paid by the said M/s. New Kishan Cement
Pvt. Ltd. within 30 days from the date of communication of this order,
the amount of penalty liable to be paid under this section shall be 25% of
the penalty so imposed. In terms of the second proviso to section 11AC of
the Central Excise Act, 1944, the benefit of such reduced penalty under
the first proviso shall be available only if the amount of penalty is also
paid by the said M/s. New Kishan Cement Pvt. Ltd. within the period of
30 days referred to above.
(A-IV) I appropriate the amount of Rs. 1.08 crore paid by M/s. New Kishan
Cement Pvt. Ltd., Shapar towards payment of wrongly availed Cenvat
credit totally amounting to Rs. 1,36,00,295/- and order for recovery of
the balance amount of Cenvat credit.
(B-I) I revoke the Central Excise registration granted to the following noticees:
a) M/s. Hindustan Exports, Bharoodi (Noticee No. 3).
b) M/s. Jayshree Vyapar Ltd., Rajkot (Noticee No. 8).
c) M/s. Karan Chemicals, Ahmedabad (Noticee No. 9).
d) M/s. Karan Marketing, Ahmedabad (Noticee No. 10).
72 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 72 of 76
They shall surrender the original registration certificate to the
jurisdictional Central Excise authority immediately upon receipt fo this
order.
(B-II) I impose following penalty upon the noticees below mentioned noticees
under rule 26 of Central Excise Rules,2004:
Noticee No.
Noticee Penalty (Rs.)
Penalty (Rupees, in words)
3. M/s. Hindustan Exports 5,00,000/- Five Lakh only.
8. M/s. Jayshree Vyapar Ltd. 5,00,000/- Five Lakh only.
9. M/s. Karan Chemicals 5,00,000/- Five Lakh only.
10. M/s. Karan Marketing 5,00,000/- Five Lakh only.
(C-I) I impose following penalty upon the noticees below mentioned noticees
under rule 26 of Central Excise Rules,2004:
Noticee No.
Noticee Penalty (Rs.)
Penalty (Rupees, in words)
2. Shri Navneet G. Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.
5,00,000/- Five Lakh only.
4. M/s. Kathiawad Industries, Bharoodi.
1,00,000/- One Lakh only.
5. Shri Kuldipsinh Basiya.
5,00,000/- Five Lakh only.
6. Shri Rajan V. Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.
25,00,000/- Twenty Five Lakh only.
7. M/s. Radhey Vyapar Ltd., Rajkot.
5,00,000/- Five Lakh only.
11. M/s. Maruti Enterprise, Jamnagar
50,000/- Fifty Thousand only.
12. M/s. Samrat Cement, Hadamtala.
2,50,000/- Two Lakh Fifty Thousand only.
13. Shri Ashok Vasani, Partner of M/s. Samrat Cement, Hadamtala.
1,00,000/- One Lakh only.
14. Shri Bhavin Pabari of M/s. Radhey Vyapar Ltd.
1,00,000/- One Lakh only.
73 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 73 of 76
15. M/s. Pyramid Portland Cement
2,50,000/- Two Lakh Fifty Thousand only.
16. M/s. Om Sai Ram Transport, Jamnagar
50,000/- Fifty Thousand only.
17. Shri Pravin Bhanderi, Managing Director of M/s. Pyramid Portland Cement.
1,00,000/- One Lakh only.
18. M/s. Pratham Transport, Jamnagar.
50,000/- Fifty Thousand only.
19. M/s. Nilkanth Cement. 2,50,000/- Two Lakh Fifty Thousand only.
20. M/s. Kailash Cement Industries.
2,50,000/- Two Lakh Fifty Thousand only.
21. M/s. Tapee Cement Industries.
2,50,000/- Two Lakh Fifty Thousand only.
22. Shri Khodidas Sojitra, Director of M/s. Nilkant Cement.
1,00,000/- One Lakh only.
23. Shri Arvind Gangdas Sakhiya, Partner of M/s. Tapee Cement Industries.
Nil (on account of his demise)
Nil (on account of his demise)
24. Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries.
1,00,000/- One Lakh only.
25. Shri Shashikant Koticha, Director of M/s. Jayshree Vyapar Ltd.
1,00,000/- One Lakh only.
26. Shri Gautam Patel, Partner of M/s. Karan Marketing.
2,00,000/- Two Lakh only.
27. Shri Chandrakant J. Patel, partner of M/s. Karan Chemicals.
2,00,000/- Two Lakh only.
Show Cause Notice No. AE/D.II/AR-Shapar/COMMR/55/2011 dated
29.3.2011 is decided in above terms.
(II) Show Cause Notice No. IV/03-31/D/2008-09 dated 21.10.2008: (A-I) I confiscate 11.750 MT of Ordinary Portland Cement valued at Rs.
55,225/- under rule 25 of Central Excise Rules,2002 and in lieu of
74 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 74 of 76
confiscation, I impose fine of Rs. 6,000/- (Rupees Six Thousand only)
upon M/s. New Kishan Cement Pvt. Ltd., Shapar (Veraval), Dist. Rajkot.
(A-II) I impose penalty of Rs. 6,000/- (Rupees Six Thousand only) upon M/s.
New Kishan Cement Pvt. Ltd. Shapar (Veraval), Dist. Rajkot under rule
25 of Central Excise Rules,2002.
(A-III) I impose penalty of Rs. 6,000/- (Rupees Six Thousand only) upon Shri
Navneetbhai Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.,
Shapar (Veraval), Dist. Rajkot under rule 26 of Central Excise Rules.
Show Cause Notice No. IV/03-31/D/2008-09 dated 21.10.2008 is
decided in above terms.
(V. Padmanabhan)
Commissioner, Customs & Central Excise,
Rajkot. Rajkot, dated 31.3.2013. F. No. V.25/15-316/Adj/2009. To
01 M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot
02 Shri Navneet Gokulbhai Vadaliya, Director, M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot
03 M/s. Hindustan Exports, (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001
04 M/s Kathiawad Industries (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001
05 Shri Kuldipsinh Basiya, Partner, M/s Hindustan Exports, (Bharoodi) & M/s Kathiawad Industries, (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001
06 Shri Rajan V. Vadaliya, Director, M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot.
07 M/s. Radhe Vypar, 127, Star Chambers, Panchnath Plot, Harihar Chowk, Rajkot 360 001
08 M/s. Jayshree Vypar Limited, Jayshree Vyapar Bhavan, Near Shivalik-5, Gondal Road,Rajkot 360 002
75 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 75 of 76
09 M/s. Karan Chemicals, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Bodakdev, Ahmedabad 380 015
10 M/s. Karan Marketing, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015
11 M/s Maruti Enterprise, 403, Deepak Shopping Centre, Ranjit Road, Opp. Sajuba High School, Jamnagar 361 001
12 M/s. Samrat Cement and Chemical Industries, 126/127, Arthik Bhavan, 2nd floor, Near Bombay Petrol Pump, Gondal Road, Rajkot 360 002
13 Shri Ashok Dhirubhai Vasani, Partner, M/s. Samrat Cement and Chemical Industries, 126/127, Arthik Bhavan, 2nd floor, Near Bombay Petrol Pump, Gondal Road, Rajkot 360 002
14 Shri Bhavinbhai Pabari, Proprietor, M/s. Radhe Vypar, 127, Star Chambers, Panchnath Plot, Harihar Chowk, Rajkot 360 001
15 M/s. Pyramid Portland Private Limited, 303, Lotus Arcade, Opp. Automotive Bajaj, Gondal Road, Rajkot 360 002
16 M/s. Om Sai Ram Transport, 105, Maruti Complex, Nagnath Gate Circle, Jamnagar 361 001
17 Shri Pravin Bhanderi, Managing Director, M/s. Pyramid Portland Pvt Limited, 303, Lotus Arcade, Opp. Automotive Bajaj, Gondal Road, Rajkot 360 002
18 M/s Partham Transport, Flat No: 12, Rangoli Apartments, Street No: 3, Patel Colony, Jamnagar.
19 M/s. Nilkanth Concrete Private Limited, 3rd floor, Omega Complex, Gondal Road, Rajkot.
20 M/s. Kailash Cement Industries / Kaveri Cement, Plot No: G-1935/4-5, GIDC, Lodhika, AT: Metoda, Tal: Lodhika, Dist: Rajkot
21 M/s. Tapee Cement Industries, Plot No: 2758/59/60/61/62/63/74/75, Metoda GIDC, Kalawad Road, Dist: Rajkot.
22 M/s. Khodidas D. Sojitra, Director, M/s. Nilkanth Concrete Private Limited,3rd floor, Omega Complex, Gondal Road,Rajkot
23 Shri Arvind Gangdas Sakhiya, Partner, M/s. Tapee Cement Industries, Plot No: 2758/59/60/61/62/63/74/75, Metoda GIDC, Kalawad Road, Dist: Rajkot.
24 Shri Dhiraj Rangani, Partner, M/s. Kailash Cement Industries / Kaveri Cement, Plot No: G-1935/4-5, GIDC, Lodhika, AT: Metoda, Tal: Lodhika, Dist: Rajkot.
25 Shri Sashikant Koticha, Director, M/s. Jayshree Vypar Limited, Jayshree Vyapar Bhavan, Near Shivalik-5, Gondal Road,Rajkot 360 002.
26 Shri Gautam J. Patel, Partner, M/s. Karan Marketing, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015.
76 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others
1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008
Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013
Page 76 of 76
27 Shri Chandrakant J. Patel, Partner, Karan Chemicals, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015.
Copy to:
1. The Chief Commissioner, Central Excise, Ahmedabad. 2. The Assistant Commissioner (AE), Central Excise, Rajkot. 3. The Assistant Commissioner (RRA), Central Excise, Rajkot. 4. The Assistant Commissioner (Legal), Central Excise, Rajkot. 5. The Assistant Commissioner, Central Excise, Division-II, Rajkot. 6. The Superintendent of Central Excise, A.R.: Shapar. 7. F. No: V.25/15-18/Adj/2011. 8. Guard File.